Metals Update – Feb 10 2023

Chinese Copper appetite increases – LME Copper inventories are at the lowest levels since 2005

In the middle of the week, copper prices rose again as dealers anticipated growing Chinese demand in their downstream industries. At the time of writing, LME 3-month copper was up 0.63% at 8948.50 USD/Tonne, while SHFE 3-month copper was up 0.7% to 68600 Yuan a tonne.

There is new hope for China’s recovery after removing pandemic controls at the end of 2022. After the Chinese Lantern Festival on February 5th, when employees return to their workplaces, it is anticipated that copper demand will rise, further supported by the Chinese State Grid Corp’s recent bullish investment plan and the sector’s resurgence in the country.

Supply issues also continue to be supportive of prices. LME Copper inventories are at their lowest levels since November 2005, falling to 65,100 tonnes, counteracted by the rising inventories in Shanghai Futures Exchange warehouses.

US prepares 200% levies on Russian Aluminium 

Market participants are closely monitoring the London Metal Exchange (LME), the centre of the world’s benchmark pricing, as the US is set to impose a hefty duty on imports of Russian aluminium. The effect will be small according to the UK’s experience with levies on Russian metal.

The LME retaliated by forbidding fresh deliveries of Russian metal into its UK warehouses when the UK imposed comparable duties on Russian metal. Since there was no metal from the affected brands kept in the UK warehouses, this action was primarily symbolic.

A 200% tariff on Russian aluminium is anticipated from the US shortly to put pressure on Moscow as the first anniversary of the Ukrainian incursion draws near. Bloomberg has reported that the tariff might go into effect this week.

The market impact would be negligible if the LME forbade aluminium deliveries to its US facilities due to the vast majority of the LME’s aluminium inventories kept in Asia. However, the US only holds a minuscule portion (less than 1%) of the 390,200 tonnes of global aluminium stocks. Furthermore, according to the LME’s off-warrant stock reporting, the US only has 2,353 tonnes of off-warrant aluminium.


Calendar of Events

Feb 13, 2023

Consumer Inflation Expectations

Feb 14, 2023

UK Unemployment Rate (DEC)

Feb 16, 2023

Chinese House Price Index (YoY)

Foenix Partners, 26 Curtain Road, London, EC2A 3NY