Forum Topics SFR SFR Bull Case

Pinned straw:

Added 8 months ago

Explains the big jump in copper and other base metal companies today

With high cost producers closing, this might put some supply pressure on copper and base metals and I guess we are seeing this in the lift of copper prices.

Interesting China gov has not intervened to subsidise the copper smelters, otherwise smelters would not be making cuts.

Copper price soars to 7-month high on China’s plans to cut output

Staff Writer | March 13, 2024 | 9:29 am Markets China Copper

China copper smelters raise Q4 treatment charge floor ahead of miner talks

Copper prices soared on Wednesday to their highest in seven months after Chinese smelters, which process half of the world’s mined copper, agreed on a joint production cut.

Benchmark three-month copper on the London Metal Exchange (LME) touched $8,799 a metric ton, the highest since Aug. 1, 2023. It last traded 1.6% up at $8,790 as at 1055 GMT.

The rise started on the Shanghai Futures Exchange (SHFE), where copper reached a two-year high of 70,460 yuan ($9,796) per ton.

China’s biggest copper smelters met in Beijing on Wednesday, agreeing on a symbolic cut in loss-making production, without specifying volumes and timing.

“It’s a knee-jerk response to rush in. Interest spiked on SHFE right after the announcement of China’s production cut,” a trader said. “Who will admit they are the first to turn unprofitable?”

Shortages have led to intensifying competition for mined copper concentrates, causing a sharp fall in income for smelters to decade-low levels.

“But it’s important to note that there are around 1.7 million tons per year new ex-China smelter projects that are expected to come online in the second half, which will put more pressure on global concentrate supply,” said Brian Peng, a copper analyst of consultancy CRU.

More global copper smelters were not operating in the first two months of the year than in the same period last year, mainly because of Chinese inactivity, data from satellite surveillance of metal processing plants showed.

However, higher copper prices could further dampen demand in top consumer China, as can be seen in inventories.

Copper inventory in warehouses monitored by SHFE rose steeply to 239,245 tonnes as at March 8 from 30,905 tonnes in the beginning of the year.


Bear77
Added 8 months ago

With BHP acquiring OZ Minerals almost 1 year ago (in April 2023), Sandfire (SFR) is now the only decent sized (and quality) pure copper play on the ASX, and they do produce a little gold as a byproduct of copper production, up +7.22% on that China supply side news that @edgescape mentions - and then there's Evolution Mining (EVN), a gold producer I recently sold out of (the second largest gold producer on the ASX if you don't count CDIs for US-listed companies like Newmont, or companies like SFR and BHP who both produce gold as a byproduct of copper production), who produce a fair bit of copper now - from Ernest Henry and Northparkes - as well as gold - EVN up +6% today, staging a little mini-recovery...

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Perhaps Jake Klein didn't lose his mojo after all... He could yet have the last laugh. This intentional move into copper could yet pay decent dividends for him. JK was known as one of the two best deal makers in the gold sector, and BB isn't even in the gold sector any more (busy with DVP in base metals and mining services) so JK is the only one still in gold, or gold/copper now; perhaps my lost faith in Mr Klein was a tad premature...

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