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Copper Rises on Supply Deficit Forecasts, Chinese Stimulus

March 19, 2019 at 18:25 by Andrew Moran

Copper futures are strengthening on Tuesday, though intraday gains have been pared. The industrial metal is rising on the latest forecast that suggests there will be a global supply deficit by the end of the year. Copper prices were also lifted on Chinese stimulus, bullish hopes for second-quarter growth, and Poland potentially cutting copper taxes.

May copper futures rose $0.015, or 0.5%, to $2.92 per pound at 17:48 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. Year-to-date, copper is up more than 10%, but it has been nearly a year since the red metal touched the crucial $3 mark.

Antofagasta, one of the world’s largest miners, predicts that the global copper market will slip into a deficit by the end of the year. The Chilean miner anticipates a deficit of as much as 300,000 tonnes, driven mostly by higher consumption growth and minimal production increases.

Its prediction comes as the latest figures show annual copper output climbed 3% to 725,300 tonnes, higher than its initial forecast.

Meanwhile, China, one of the world’s biggest copper consumers, announced that it is cutting taxes for manufacturers beginning next month. As of April 1, Beijing will reduce the value-added tax (VAT) for manufacturing, as well as other sectors. The government believes that tax cuts and fee reductions will be instrumental in reversing the downward trend in the national economy.

Could this give a boost to the economy in the April-to-June period? It is already expected that Q2 growth will occur at a slower pace, but it will be an improvement from the seasonally slow first three months of 2019, which typically happens because of the long Chinese New Year holiday.

Ahead of this year’s general elections, Polish lawmakers from the ruling Law and Justice Party have proposed cutting mining tax payments so major copper and silver companies, like KGHM, could invest more in operations. While it will lead to less state revenue, proponents say it will help the economy.

Lowering the mining levy by 15% … will make additional funds available to KGHM, which will significantly translate into long-term stability and development of the company.

April gold futures tacked on $5.80, or 0.45%, to $1,307.30 per ounce. May silver futures added $0.06, or 0.41%, to $15.385 an ounce. May platinum futures surged $19.00, or 2.28%, to $853.00 per ounce. May palladium futures soared $15.30, or 0.99%, to $1,555.00 per ounce.

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