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Copper futures broke above $4.00 per pound yesterday for the first time since last July. That move followed an announcement that several of China’s largest smelters would idle some capacity to deal with a drop off in concentrate supplies and treatment charges. China is the largest global importer of copper and a major exporter of finished products utilizing copper components. 

A bounce in Beijing’s outbound trade data throughout the first two months of 2024 could signal a burgeoning rebound in Chinese factory activity, which has now contracted for five consecutive months. If that is the case, it could begin to bolster demand for refined copper – pushing up futures prices and miner shares.

Related ETF: Global X Copper Miners ETF (COPX)

Copper prices spiked yesterday as some of China’s top copper smelters, including Jiangxi Copper, Tongling Nonferrous Metals Group, Jinchuan Group, and China Copper, agreed to initiate joint production cuts at some loss-making plants that now face short supplies of copper concentrate. Bloomberg reports that smelter maintenance could also add some further tightness to the copper market, set to peak in April and May. Copper futures’ move above the $4.00/lb threshold brought the red metal’s return in the year-to-date period to about 3.8%.

The country’s imports of copper concentrate have risen to 4.66 million tons in the first two months of the year, up 0.6% YoY, but disruptions to supply have made it more difficult and expensive to get raw supply in. This has put smelters in a predicament as their treatment and refining charges (TCs)…

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