United States Of America – Copper futures fell to $4.2 per pound, the lowest level in nearly ten weeks, as inventories increased and investors reduced risk exposure in anticipation of the US Fed announcing a faster end to its bond-buying program.

On-warrant LME inventories in certified warehouses increased to 82,850 tons, the highest level in more than two months.

Concerns about a slowdown in China’s property sector remain on the demand side, after data showed that home prices, sales, investment, and construction all fell in November due to weak demand and a cash crunch among developers.

In other news, Peru’s government failed to hold a planned meeting on Tuesday between MMG Las Bambas copper mine and a local community that has been blocking the road used by the company to transport its metal for 25 days, threatening a complete production halt.

Copper futures are widely traded on the London Metal Exchange (LME), the Chicago Mercantile Exchange (COMEX), and the Multi-Commodity Exchange in India.

The standard contract weight is 25,000 pounds.

Copper is the world’s third most common metal.

Chile produces more than one-third of the world’s copper, followed by China, Peru, the United States, Australia, Indonesia, Zambia, Canada, and Poland.

China, Japan, India, South Korea, and Germany are the top copper importers.

Market prices are based on over-the-counter (OTC) and contract for difference (CFD) financial instruments.

Copper & The Infrastructure Bill

Copper futures current $4.20 per pound is far above of it pre-pandemic medium of $2.50. The news of its 10 week low is most likely related to the upcoming Fed report later today on inflation. Inflation has been hammering the middle and lower classes in the United States for nearly 2 years while inflating profits, equity and valuations for the upper class and corporations.

Fiber Networks & Communications

Copper is one of the oldest indicators along with correlating gold and lumber. Bylt:// has seen an explosion in infrastructure related bids and requests for proposals ranging from new networking, communications, and a explosive expansive fiber network.

Expect copper to hold steady and demand to increase further well into 2022 and beyond. Fiber? Dark Fiber? Lit Fiber Is that copper? No it isn’t copper. But networks and related apparatus use copper and fiber together. There has been a tremendous up tick in these fiber and networking infrastructure bids for schools, towns, agencies and communities throughout the country and rapidly increasing in scope and quantity.

For example copper is used for links between existing pillars and new nodes, as well as for extensions on fiber-to-the-curb deployments (FttC) for lead-ins to reach the FttC distribution point unit. As well as panel to device connections.

Water Infrastructure & Lead Pipe Bills

Along with infrastructure for networking the U.S. is also seeing a rapid contracting increase on lead pipe replacement and general water related infrastructure needs. All will contribute to a steady increase in demand for Copper over the next years to come. The demand for housing and the affordable housing crisis will also be there pecking at coppers feet.

Copper Surplus In 2022?

ICSG has reported an expected surplus in 2022 and only a small deficit in 2021. According to the International Copper Study Group, or ICSG, the refined copper market will have a deficit of 479,000 mt in 2020.

ICSG forecasts a small deficit of 42,000 mt in 2021, with supply exceeding demand by a massive 328,000 mt in 2022.

The 2022 surplus is based on a 3.9 percent increase in refined output, the largest increase in eight years, and a 2.4 percent increase in copper demand, according to ED&F Man Capital Markets analyst Edward Meir in a note Dec. 7.

Even though an increase in demand is expected, it will not be enough to offset the increase in supply, according to a public statement from Commerzbank commodities analyst Daniel Briesemann.

Furthermore, the noticeable supply difference is due to the anticipated significant recovery in mine output.

According to ICSG, mine output will increase by 3.9 percent as a result of the commissioning of several new projects and expansion of existing mines, according to Briesemann.

This was echoed by UK brokerage Marex Spectron, which stated in a research note Dec. 7 that according to CRU, a commodity research company, the following two years are expected to see a surplus after a deficit in 2021.

Anticipated are projects such as Teck’s QBII mine in Chile and Anglo’s Quellaveco project in Peru, which could add 200,000 mt online.

Then there’s Ivanhoe’s mine in the [Democratic Republic of] Congo, which could add an additional 70,000 mt.
You also have the ramp at Freeport’s Grasberg [in Indonesia], which could add 110,000 mt.

Apart from primary copper output an increase in secondary copper production from scrap copper was also anticipated to contribute to copper’s surplus.

The supply chain was not seeing the same bottlenecks as earlier in the pandemic with operations becoming more fluid as lockdown restrictions were eased.

The increased copper supply was also critical for replenishing severely depleted inventories.

Copper Demand Continues To Grow

Copper prices rose this morning, supported by demand, as investors await clues from today’s Federal Reserve meeting on when the US central bank will begin to raise interest rates. Copper futures gained 0.14 percent to $9,425 per tonne.

According to ANZ Research, US buyers of Chilean state-owned copper miner Codelco have agreed to raise the premium they pay for copper cathode next year.

China, the world’s largest consumer, may see a rebound in demand after Beijing recently pledged to implement prudent monetary policy and proactive fiscal policies to stabilize the economy and support growth to a reasonable level in 2022.

However, price gains are limited as investors closely monitor the Federal Open Market Committee meeting today for signs of a rate hike by the US central bank. Although the market expects the US Fed (Federal Reserve) to accelerate asset tapering and raise interest rates in the face of rising inflationary pressures, improved liquidity at the end of the year may underpin copper prices.

To prevent the spread of Covid-19, authorities closed key ports in north China. The port closure hampered copper concentrate supply to smelters in northwest China, reducing output.

Rising domestic production as smelters ramped up output following the end of China’s power rationing may pose downside risks to the copper price.

The domestic copper inventory is likely to stop falling and start growing possibly putting downward pressure on copper prices but a force of revolutionary connectivity infrastructure and device manufacturing for not only technology but energy infrastructure may out weigh inventory for 2022-2024 resulting in stationary price forecasts or increases.

Other base metal prices:

Aside from copper, tin was up 0.52 percent at $38,802.5/ton. Zinc fell 1.29 percent to $3,262.25 per ton, aluminum fell 0.47 percent to $2,616.25 per ton, and lead fell 0.70 percent to $2,268.50 per ton. Nickel was trading at $19,440.00 per ton, down 0.23 percent.