Copper CBS August 2021 - Copper prices rebound from lows seen in early July

After drifting down from $9,385 per tonne July 12 to $9,245/t on July 20, the London Metal Exchange three-month, or LME 3M, copper price rebounded to $9,805/t on July 29 on investor optimism toward the demand outlook and concerns over a potential supply squeeze. Unionized workers at BHP's Escondida mine rejected the latest labor contract offer and voted to go on strike. An imminent strike has been avoided, however, as Chilean law ensures a period of mediation by the government as a last resort. Other miners are also in contract negotiations with workers at their mines, such as Caserones and Andina, where the labor unions have also recently voted for strike action.

Access the Copper Commodity Briefing Service August 2021 Full report and Databook.

• The LME 3M copper price stood at $9,338/t on Aug. 9, helped by supply concerns amid floods in China, labor negotiations in Chile and blockades at the Las Bambas mine in Peru.
• After a four-month high of 92.97 on July 20 led by inflation fears and the spread of the coronavirus delta variant, the U.S. dollar trade-weighted index edged down to 91.86 on July 29, supporting copper prices.
• The Chinese economy continues to show signs of moderation, with the Caixin manufacturing purchasing managers' index dampening to 50.3 in July; a recent meeting of the Chinese Politburo, however, signaled that an accommodative economic policy will be maintained in the second half of the year.
• Increasing mine supply has led to a surge in the Chinese spot treatment and refining charges, which rose to $51.1/t and 5.11 cents per pound July 30, although this trend could be temporarily reverted in the event of an agreement not being reached in the current labor negotiations.
• Our average LME 3M copper price forecast for 2021 has been revised up to $9,094/t, with estimates for the third and fourth quarters of $9,236/t and $8,919/t, respectively.