Those hoping for a fresh start for copper prices in 2016 will have been disappointed this week. In the latest copper price news, the red metal has fallen about 2 percent since the start of the week.
Spot copper prices are currently sitting at around $2.04 per pound. As Fox Business News notes, that’s lowest price for the metal in nearly seven years.
Earlier this week, trading on Chinese stock markets was halted after a 7-percent drop triggered a circuit-breaker mechanism that shut down trading for the rest of the day. The mechanism came into effect Monday, and was implemented in an effort to avoid a repeat of the market crash in China this summer.
| Updated December 2015
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Most major stock indexes have similar mechanisms. The use of these circuit breakers is, ideally, not meant to be a common occurrence. However, trading shut down in China for the second time on Thursday when the markets dropped more than 7 percent again. “It’s run for your life time in China,” states an article from Forbes.
Overall, that isn’t good copper price news. “Chinese equities, some of the economic data this week have spooked the market. China is the dominant consumer of pretty much every commodity,” Investec analyst Marc Elliot told Fox Business News. Indeed, China accounts for around 45 percent of global copper demand.
Further to that point, Monday’s fall was in part driven by the release of weaker-than-expected manufacturing data out of China, raising concerns over copper demand from the country. Bloomberg reported on Wednesday that China’s State Reserve Bureau is looking to add as much as 150,000 million tonnes of refined copper to its stockpiles, but it has been suggested that the move is largely aimed at soaking up excess supply to support domestic smelters.
Indeed, copper is facing plenty of headwinds at the moment. However, with lower prices, there’s also greater potential for copper mines to shut down.
“There will be data releases on the one hand and more fundamental news on the other, such as mine closures and inventories,” Citigroup commodities analyst David Wilson told The Wall Street Journal on Monday. “We will get a lot of push and pull in prices, a lot of volatility.”
Imperial Metals (TSX:III) announced on Wednesday that Huckleberry Mines has suspended pit operations at the Huckleberry mine amid low copper prices. “While HML has made significant efforts to reduce operating costs at the Huckleberry mine, the realized savings have not been sufficient to offset declining copper prices,” the release states. One hundred to 260 employees will be affected.
On a more positive note, NGEx Resources (TSX:NGQ) hit a milestone with the release of a preliminary economic assessment that considers its Los Helados and Josemaría copper-gold–silver deposits as an integrated project. The project would produce an estimated 7.1 million tonnes of copper 8.5 million ounces of gold, and 55.6 million ounces of silver over a 48-year mine life.
Euromax Resources (TSXV:EOX) also had positive news to report this week, announcing the results of a feasibility study for its wholly owned Ilovica project in Macedonia. Highlights include a post-tax net present value of US$440.1 million at a 5-percent discount, a post-tax internal rate of return of 17.8 percent and all-in costs of US$372 per ounce of gold.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
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