The price of copper has been declining for the past few weeks, as concern over a fresh surge in coronavirus cases in North America and Europe rises among investors. On the Comex market, copper for delivery in September declined by about 2%, reaching $4.22 per pound. On the Shanghai Futures Exchange, the most-traded copper contract for September fell by about 0.5% to $10777.34 per ton.
The price of copper is saddled by the increasing coronavirus cases globally and potential tightening in policies in some major economies, which may make it more difficult to recover. Earlier this week, China, which is the biggest consumer market globally, announced that imports for refined copper declined in July for the fourth consecutive month, which adds to the lost momentum. Retail, fixed asset investment and industrial output figures released at the start of the week were all below expectations, which only contributes to the nervousness about the possible spread of the delta variant in China.
Andy Home, a columnist at Reuters, stated that the lack of excitement represented a scarcity of speculative interest in the red metal at the moment, with fund positioning low on the Shanghai Futures Exchange, the Chicago Mercantile Exchange and the London Metal Exchange markets. Goldman Sachs proposes that the next increase in copper’s price will be facilitated by struggling supply, noting that Chinese demand has been the greatest price driver for copper thus far. The bank adds that the tension between micro positivity and macro negativity is especially serious for copper if one considers the structurally challenged chain of supply.
The laborer strikes that began last week in the Andina and Caserones copper mines in Chile have strained the supply chain even further. The Andina mine is owned by Codelco while the latter mine is owned by JX Nippon Copper. Last year, the Caserones mine produced almost 130,000 copper tons while the Andina copper mine produced roughly 185,000 tons of copper. The latter mine is now operating at a reduced rate.
The temporary suspension of Canada’s Highland Valley mine brought on by a nearby wildfire has also halted operations at the mine, which produced 120,000 tons of copper in 2020. This halt in operation also adds to the strain on the global supply chain. Meanwhile, the U.S. bipartisan infrastructure bill, which is focused on boosting the United States’ demand for copper by about 80,000 tons annually over a five-year period is yet to be approved.
The policy direction that the U.S. federal government is taking looks set to create a bright future for companies such as Excellon Resources Inc. (TSX: EXN) (NYSE American: EXN) (FSE: E4X2), which produce the metals required during the energy transition as demand is set to grow.
NOTE TO INVESTORS: The latest news and updates relating to Excellon Resources Inc. (TSX: EXN) (NYSE American: EXN) (FSE: E4X2) are available in the company’s newsroom at https://ibn.fm/EXN
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