In afternoon trading in New York, copper for delivery in December was trading just off its low for the day of $2.538 a pound ($5,596 a tonne), bringing losses for 2019 to more than 5%.
Trade worries have dogged copper price bulls for the better part of a year, but more recently weak data from China, the US and Germany, together responsible for 70% the world’s consumption, have intensified the sell off.
While there is near unanimous consensus that copper’s long term prospects are bright (particularly under a Greta Thunberg scenario), a lower for longer price is likely to cull the industry of marginal producers – those in the 90th percentile of costs.
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In a new report, BMO Capital Markets slashed its forecast for the copper price for next year by 9.6% to $2.93/lb ($6,460/t) and by smaller margins through 2023. The investment bank kept its long-term equilibrium price for the orange metal steady at $3.25/lb ($7,165/t).
BMO calculates at current prices, some 10% of copper mines around the globe are operating at a loss (while nickel extractors can’t believe their luck – see graph).
Apart from longer term trends like falling grades at mature mines, metals consultancy CRU estimates weakness in prices for metals mined as a byproduct – particularly cobalt – has added roughly $290 per tonne this year. Without higher gold and silver prices, upward pressure on costs would have been even more intense.
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