Copper is a heavily traded metal that has different applications in a number of industries. The metal’s producers in China plan to export nearly 100,000 metric tons, their highest volume in more than a decade. Their objective is to cool a rally that has pushed prices toward new highs.
Producers in the East Asian country are selling into the rally, driven by a frenzy that saw prices of the red metal on the London Metal Exchange reach $10,208 per metric ton. This figure is about $600 short of its March 2022 high, when copper reached $10,845 a metric ton.
Sources reveal that the 100,000 copper tons shall leave the country over the next couple of weeks, adding that the last time China exported such a high amount in one month was in 2012. Two of the sources also revealed that most of the copper would probably come through bonded warehouses in China. Inventories currently stand at about 77,000 tons, a significant increase, particularly when compared to 6,600 tons recorded at the start of the year.
The amount of copper to be exported is a fraction of the country’s total consumption, which adds up to almost 13 million tons annually. China is currently the biggest consumer of the metal. One industry source argued that prices on the London Metal Exchange didn’t translate to what could be seen in China’s physical market, adding that excess metal in premiums and stock data could be observed.
Last week, the International Copper Study Group announced that the international copper market faced a surplus of 162,000 tons in 2024. This is in addition to a surplus of 94,000 tons next year. Inventories of the red metal in warehouses monitored by the Shanghai Futures Exchange are nearing four-year highs, which indicate sluggish demand. The Yangshan premium also dropped to a record low, indicating the diminishing appetite for copper imports from China.
Currently, the main destinations of exports of copper ore from China are Singapore, Malaysia, Cambodia, Papua New Guinea and Italy.
Sources theorize the arbitrage between the Shanghai Futures Exchange and the London Metal Exchange is making it profitable to export the red metal. One source in logistics adds that producers have already begun asking about costs of moving copper to warehouses under the London Metal Exchange from China. A different source at a copper smelter in China also revealed that it expects to export about 20,000 tons of copper monthly if prices on the London Metal Exchange remain at the current level.
With the demand for copper poised to rise over the coming years as green-energy penetration gathers steam, exploration companies such as Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) could be poised for explosive growth in investor interest.
NOTE TO INVESTORS: The latest news and updates relating to Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are available in the company’s newsroom at https://ibn.fm/AZMCF
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