Sumitomo Metal Mining Company, Japan’s second-largest copper smelter, believes that copper will be in short supply for at least half a decade, reported Bloomberg News Wednesday.
Falling production of copper ore in Chile and Indonesia, high demand in growing Asian economies and some safety concerns will cut into the supply of ore, according to the firm’s president, Nobumasa Kemori.
“It’s a seller’s market for concentrates and I don’t think this will change before 2014 or 2015…We don’t want to increase output with raw material sourced from the spot market,” Kemori told Bloomberg News.
Copper futures surged on Wednesday, rising 3.03 percent to trade at 347.2 cents per pound of refined metal. However, processing fees for the smelting of ore into copper have dropped, making some smelters less enthusiastic about increasing production.
Barclays Bank projects that the cash price for copper will average nearly $7,000 per ton on the London Metal Exchange during the fourth quarter, reported Bloomberg; currently, copper for delivery in three months trades at about $7,585 per ton on the LME.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
