Shy of a world economic collapse, I am a perma-bull on copper in the mid- to long-term. Despite strong supply-demand fundamentals, the short-term price outlook for copper is equivocal; it seems to be teetering on the totter.
Current price uncertainty for the entire industrial metals complex is due to the trade dispute between the United States and China. China is by far the largest consumer of metals in the world with America way behind in second place. Ambivalence with a slowing Chinese economy further weakened by the tariff snafu is well-founded and has cast a pale over normally robust speculative markets for both hard and soft commodities.
Additionally, hedge fund speculators largely abandoned the derivative markets for hard commodities in Q4 2018 with the gross numbers of futures and options contracts at near-historic lows for both energy and metal sectors.
This graph shows copper prices since Donald J. Trump was elected President of the United States in early November 2016:
LME Spot Copper Price: Nov 2016 to Present
My recap follows:
Recent factors in the copper price equation include:
Now let’s take a renewed look at the yearly seasonality of copper. We first addressed this subject with a 13-year treatment (Mercenary Musing, April 11, 2016). This table shows January opens and December closes of spot copper over16 years. Bull years are defined as > +10% ; bear years are < –10% ;
Year | Jan Open | Dec Close | % Change |
2003 | 0.73 | 1.10 | 50.7 |
2004 | 1.10 | 1.49 | 35.2 |
2005 | 1.42 | 2.08 | 46.3 |
2006 | 2.06 | 2.85 | 38.6 |
2007 | 2.81 | 3.03 | 7.7 |
2008 | 3.02 | 1.32 | -56.5 |
2009 | 1.39 | 3.33 | 139.2 |
2010 | 3.39 | 4.42 | 30.5 |
2011 | 4.42 | 3.43 | -22.6 |
2012 | 3.47 | 3.59 | 3.3 |
2013 | 3.67 | 3.35 | -8.5 |
2014 | 3.37 | 2.88 | -14.5 |
2015 | 2.86 | 2.13 | -25.5 |
2016 | 2.11 | 2.49 | 18.4 |
2017 | 2.53 | 3.25 | 28.4 |
2018 | 3.26 | 2.65 | -18.7 |
Below are our new charts for composite, bull, and bear years:
Recurrent demand factors strongly influence seasonal copper price patterns:
Finally, here are year-to-date prices. With a 10 % gain so far, this is a familiar bull market pattern and an encouraging start for the year:
In summary, there has been no near-term consensus for copper by speculators, traders, suppliers, and/or consumers from August 2018 to January 2019. This led to a directionless and range-bound market with prices at or near all-in costs for low-margin producers.
The market has rebounded nicely since the beginning of 2019, with prices up over 10% and closely tracking seasonal bull market trends. Supply and demand fundamentals are strong.
That said and in my opinion, copper will continue to teeter on the totter until real progress is made on the thorny trade issues between the United States of America and the so-called “People’s Republic” of China.
I also opine that once a satisfactory resolution is reached, prices for copper and other industrial metals are set to soar.
Ciao for now,
Mickey Fulp
Mercenary Geologist
Acknowledgment: Troy McIntyre is the research assistant for MercenaryGeologist.com.
The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia.
Mickey worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specializing in geological mapping, property evaluation, and business development. In addition to Mickey’s professional credentials and experience, he is high-altitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia.
Mickey is well-known and highly respected throughout the mining and exploration community due to his ongoing work as an analyst, writer, and speaker.
Contact: Contact@MercenaryGeologist.com
Disclaimer and Notice: I am not a certified financial analyst, broker, or professional qualified to offer investment advice. Nothing in any report, commentary, this website, interview, and other content constitutes or can be construed as investment advice or an offer or solicitation or advice to buy or sell stock or any asset or investment. All of my presentations should be considered an opinion and my opinions may be based upon information obtained from research of public documents and content available on the company’s website, regulatory filings, various stock exchange websites, and stock information services, through discussions with company representatives, agents, other professionals and investors, and field visits. My opinions are based upon information believed to be accurate and reliable, but my opinions are not guaranteed or implied to be so. The opinions presented may not be complete or correct; all information is provided without any legal responsibility or obligation to provide future updates. I accept no responsibility and no liability, whatsoever, for any direct, indirect, special, punitive, or consequential damages or loss arising from the use of my opinions or information. The information contained in a report, commentary, this website, interview, and other content is subject to change without notice, may become outdated, and may not be updated. A report, commentary, this website, interview, and other content reflect my personal opinions and views and nothing more. All content of this website is subject to international copyright protection and no part or portion of this website, report, commentary, interview, and other content may be altered, reproduced, copied, emailed, faxed, or distributed in any form without the express written consent of Michael S. (Mickey) Fulp, MercenaryGeologist.com LLC.
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