AEGIS Hedging - Metals First Look
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LME Aluminum 3M Select trades $23.50 higher to $3282 at 8:54:17 AM
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LME Copper 3M Select trades $57.50 higher to $14161.50 at 8:54:16 AM
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(Bloomberg) – The copper market is contending with a fresh bout of supply tightness in the London Metal Exchange’s warehousing network, and it’s looking severe enough that it might lift prices to new highs. The timing of the move may seem counterintuitive for a metal that’s long been viewed as a bellwether for the global economy. The war in Iran has piled pressure on manufacturers who are facing a surge in prices for fuel, energy, and other industrial inputs, and it may prompt central bankers to raise interest rates that would add to the squeeze on their bottom line. Rather than being reflective of any brightening in that demand outlook, the rally has instead been fueled by a steady outflow of metal linked to trade dislocations caused by the gravitational pull of the world’s two largest economies. In the US, copper imports are surging as traders capture arbitrage profits linked to the possibility that the Trump administration will impose tariffs. And in China, orders for imported copper are rising fast as buyers face constraints on both the supply of mined ore and scrap copper. Collectively, the US and China are creating a two-way pull on the LME’s dwindling inventories, with readily available stocks now standing at just 92,900 tons. That would be enough to last manufacturers in the 27-million-ton-a-year copper market a little over a day. And while there are still much bigger stockpiles in the global industrial supply chain — including vast inventories in the US — the volumes stored with the LME have an outsized impact on the direction of prices. Previous drops below the 100,000-ton threshold helped to trigger spikes in spot prices on multiple occasions in recent years. The reasons for the latest bout of tightness may appear prosaic to investors who are usually more focused on the megatrends — industrialization, urbanization and decarbonization — that have reliably driven copper demand higher, even in the face of manufacturers’ stiff resistance to rising prices. But with copper miners facing structural geological constraints in delivering enough new production to meet those needs, even more isolated bursts in spot demand can quickly put the market off-balance. The LME’s warehousing network is designed as a last-ditch source of supply to absorb such stresses, and when inventories start to run dry, they quickly become the tail that wags the dog.
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CME HRC Steel last traded at $1196 and $2 higher at 3:38:59 AM
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Price Indications
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Today's Charts
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Metals Factor Matrix
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AEGIS Factor Matrices: Most important variables affecting metals prices
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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