The copper market has been very noisy on Monday, as we continue to see a longer-term structural play for copper.
Copper
The copper market has been very noisy on Monday as we continue to bounce around in the same consolidation region. Recently, we've seen the copper market bounce around between $6.50 on the bottom and $6.80 on the top of the range. The 50-day EMA now finds itself just below the $6.50 level, offering a bit of support. And with that being the case, it's interesting to see how the market, despite the fact that it is somewhat sideways, it is a market that has been very strong as of late and is just about 3% off of the August record.
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Despite the record, the month-on-month print so far is essentially unchanged, but it's worth noting that the London Metal Exchange warehouses do have quite a bit of copper sitting in them at the moment at 100,050 tons, down from 166,000 tons a week earlier. So we are seeing a bit of a draw. That being said, total stocks were building into the end of the month, so it looks like we're still kind of kicking the can around trying to figure out if demand or supply is going to change the overall picture.
There's also a tariff overhang that is still unresolved in the United States, with original recommendations at 15% escalating to 30% about a year later if they do, in fact, go in effect January 1st, 2027.
Supply Disruptions and Long-Term Outlook
The supply coming out of some mines, such as the Kamoa-Kakula, said that its share could be down by 57,000 tons because of the floods. Ivanhoe has already cut guidance to 300,000 tons from 380,000 tons after seismic damaging. Grasberg and El Teniente are still working back structural problems, not a new one, but at this point in time that will make future supply tight.
Kevin Warsh suggested that interest rates in America will remain somewhat high, and that could be a little bit of a headwind for copper as well. But at the end of the day, the longer-term outlook for copper is based on the electrification of the economy, which is not going to change due to any of this. So, there will be healthy demand. I remain bullish of copper longer term.
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