Copper
Copper price at three-year high
November 2017
The month-average copper price rose 3.5% in October to US$6,808/t (US$3.09/lb) reaching its highest level since September 2014. October was the fifth consecutive month in which the monthly average increased.

Exchange refined copper inventories of 569kt at the end of October were little changed from 578kt at the end of September.

Short-term copper supply constraints referred to in last month’s Outlook were an ongoing theme in October. AME’s 2017 refined copper production forecast was reduced from 24.07Mt to 23.71Mt last month. Contributors to the lower supply forecast included BHP’s Olympic Dam smelter in Australia, National Iranian Copper Industries’ Sar Cheshmeh smelter and refinery, Rio Tinto’s Garfield in the US and Paranapanema’s 280ktpa Camacari in Brazil. An accident in the recovery boiler at KGHM’s 450ktpa Głogów I smelter in Poland in early October is expected to result in a 14kt drop in copper output. In the US, Rio Tinto halted production and shipments from its Kennecott Garfield 335ktpa smelter and refinery pending completion of an investigation into a fatality. Production was halted from the 8th of October after a worker was exposed to sulphur dioxide gases and later died.

Although flagged by Freeport at the beginning of 2017, the magnitude of the year-on-year production decline at the company’s US mines is worth noting. On a 100% basis, total copper output is down by 98kt to 620kt in the first nine months of 2017. The decline is largely due to expected lower grades. The biggest output falls are from Chino (down 32kt to 76kt in January–September 2017), Morenci (-27kt to 349kt) and Safford (-26kt to 53kt).

Leading European copper producer Aurubis has set its premium for copper cathodes in 2018 at US$86/t, which is unchanged from the premium level in its 2017 annual contracts. Chile’s Codelco, however, has raised its European copper cathode premium in 2018 to US$88/t from US$82/t in 2017.

Lundin Mining, majority owner of the 180ktpa Candelaria mine, reports spot concentrate treatment and refining charges (TC/RCs) between mining companies and commodity traders were stable in the September Quarter at US$75–76/t of concentrate and US7.5–7.6¢/lb of payable copper. Spot TC/RCs at which Chinese smelters were buying, however, increased from US$83/8.3¢ at the beginning of the September Quarter to US$87/8.7¢ at the end of September.