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Copper prices is not affecting the medium-term bullish trendThe current reversal in copper prices is not affecting the medium-term bullish trend for the time being. After Peru’s main mines suffered a drop in activity in recent weeks due to supply blockades, protesters temporarily lifted the blockade of a key mining highway in the south of the country, giving a boost to activity at the main copper mines.

The number of blockades has decreased over the past week, from over a hundred in January to around 37 on Wednesday, and there has been talk of a ‘lull’ during the recent Carnival holiday period, an important holiday in the region (read more here).

Despite this, there is also the fact that First Quantum Minerals Ltd’s unit, Minera Panama S.A., has suspended copper processing operations at its Cobre Panama mine, thus initiating a partial demobilisation of its workforce of more than 8,000 employees and contractors, and predicting that this pact will increase significantly in the coming weeks if concentrate shipments do not resume (read more here).

So, while there may be a temporary resumption of production (Peru) on the one hand, on the other hand we are witnessing a halt in production supply (Cobre Panama).

On the opposite front, with regard to ‘Unwrought copper and copper products‘, China recorded imports of 514 K tons in December compared to 59 K tons of exports. On a monthly basis, the decrease was -5.44% (exports) and -4.79% (imports). On a year-on-year basis, exports fell by -24.64% while imports dropped by half, -12.75%.

Copper prices is not affecting the medium-term bullish trend

Change % Import – Export copper China

Analysing the cumulative (January to December 2022), it is observed that the sum of 2022 imports (5.87 mln tons) exceeded those of 2021 (5.53 mln tons) while the sum of 2022 exports stood at 917 thousand tons, down from 932 thousand tons in 2021. Despite this, the drop in December 2022 imports is the worst drop since November 2021.

Copper prices is not affecting the medium-term bullish trend

Cumulative Copper Imports China

 

Copper prices is not affecting the medium-term bullish trend

Cumulative Copper Exports China

With regard to the C.O.T. report issued by the LME, it can be observed that the net positions of speculators, after 3 weeks of decisive rises, have now entered a first phase of reversal (17 February 2023), with a liquidation of buying positions (-0.33%) and an increase in selling positions (+1.64%). The strength of the C.O.T. Index also showed an initial slowdown.

Copper prices is not affecting the medium-term bullish trend

C.O.T. copper speculative positions

The consequence for prices remains uncertain. However, 3-month $/tonne copper quoted on the LME, after a strongly bullish trend from the lows of September 2022 to the highs recorded in mid-January 2023 ($9,550/tonne), shows a settling/reversal phase that has already resulted in a negative performance of -7% in more than a month.

At present, quotations are stationing in the $8,870/mt area, approaching the fundamental support in the $8,850/mt area, the transit zone of the lower limit of the relativistic channel that has accompanied prices since the September 2022 lows.

In the coming sessions, further price weakness cannot be ruled out with potential returns below the $8,800/mt area, without excluding potential price hikes towards $8,700/mt.

The medium-term trend still set to the upside remains confirmed and the current downturn should not significantly impact its goodness.

Copper prices is not affecting the medium-term bullish trend

Copper – 3 month $/ton daily