Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>By restricting the announcement of a 50% tariff on copper pipes/wiring and leaving out ores, concentrates, and cathodes, the Trump administration destroyed the COMEX-LME spread in one fell swoop. </li>
<li>COMEX prices have plunged, and the spread now is 150 USD/ton from the highs of almost 3000 USD/ton, with high inventories on the COMEX probably needing to be dumped. </li>
<li>Short term copper prices may face pressure, but we see an excellent outlook for the longer term, given the elevated China copper imports, which rose 18% YoY in July. </li>
</ul>


By restricting the announcement of a 50% tariff on copper pipes/wiring and leaving out ores, concentrates, and cathodes, the Trump administration destroyed the COMEX-LME spread in one fell swoop. 
COMEX prices have plunged, and the spread now is 150 USD/ton from the highs of almost 3000 USD/ton, with high inventories on the COMEX probably needing to be dumped. 
Short term copper prices may face pressure, but we see an excellent outlook for the longer term, given the elevated China copper imports, which rose 18% YoY in July. 


COMEX Spread Destroyed By Trump, Long-Term Copper Still Great

<ul>
<li>In our previous insight, <a href="https://www.smartkarma.com/insights/trump-50-import-tariff-could-send-copper-into-stratosphere-short-term-lme-can-breach-11k-usd-ton" target="_blank" data-smartkarma-citation="insights:192880" rel="noopener">Trump 50% Import Tariff Could Send Copper Into Stratosphere Short-Term: LME Can Breach 11k USD/Ton</a>, we highlighted upside risk to the LME price.</li>
<li>Comex-LME spreads remain elevated at $ 2,500/ton levels, reflecting the impact of tariffs that haven't yet been imposed, amid ongoing supply disruptions. Inventories, though, have stopped depleting on the LME. </li>
<li>We remain bullish on copper in the countdown to August 1st, where it is likely that tariffs of 50% are imposed on copper. </li>
</ul>


In our previous insight, Trump 50% Import Tariff Could Send Copper Into Stratosphere Short-Term: LME Can Breach 11k USD/Ton, we highlighted upside risk to the LME price.
Comex-LME spreads remain elevated at $ 2,500/ton levels, reflecting the impact of tariffs that haven't yet been imposed, amid ongoing supply disruptions. Inventories, though, have stopped depleting on the LME. 
We remain bullish on copper in the countdown to August 1st, where it is likely that tariffs of 50% are imposed on copper. 


Bullish Copper: Comex-LME Spreads Off The Charts + Positive China TSF Data

<ul>
<li>This follows our insight, <a href="https://www.smartkarma.com/insights/copper-breaches-10k-usd-easy-journey-to-11k-usd-ton-on-lower-inventories-in-the-short-term" target="_blank" data-smartkarma-citation="insights:191702" rel="noopener">Copper Breaches 10k USD: Easy Journey to 11k USD/Ton On Lower Inventories In The Short Term</a>. </li>
<li>Informal miners are disrupting Peruvian copper transport at the Las Bambas (320 kt annual production) and Constancia (110 kt) mines owned by <a href="https://www.smartkarma.com/entities/mmg-ltd" target="_blank" data-smartkarma-citation="entities:13961:1" rel="noopener">MMG (1208 HK)</a> and <a href="https://www.smartkarma.com/entities/hudbay-minerals-inc" target="_blank" data-smartkarma-citation="entities:25354:1" rel="noopener">Hudbay Minerals (HBM CN).</a> </li>
<li>Peru is the third largest copper producing country in the world (2.6 million tons or 10% of global production), and so following these disruptions is critical. </li>
</ul>


This follows our insight, Copper Breaches 10k USD: Easy Journey to 11k USD/Ton On Lower Inventories In The Short Term. 
Informal miners are disrupting Peruvian copper transport at the Las Bambas (320 kt annual production) and Constancia (110 kt) mines owned by MMG (1208 HK) and Hudbay Minerals (HBM CN). 
Peru is the third largest copper producing country in the world (2.6 million tons or 10% of global production), and so following these disruptions is critical. 


Peruvian Copper Supply Disruptions Gaining Momentum: Bullish Copper, Back To Over 10k USD This Week?

<ul>
<li>Inventory depletion across the LME and SHFE continued as copper prices breached the 10k USD level to end the week 3.7% higher.  </li>
<li>The COMEX-LME spread breached $1,000/ton again, leading us to be confident that there will be a further rally in the short term. </li>
<li>We see an easy journey to 11,000 USD/ton on a weaker dollar, stronger COMEX premiums, depleted inventory levels, and lower-than-expected global production. </li>
</ul>


Inventory depletion across the LME and SHFE continued as copper prices breached the 10k USD level to end the week 3.7% higher.  
The COMEX-LME spread breached $1,000/ton again, leading us to be confident that there will be a further rally in the short term. 
We see an easy journey to 11,000 USD/ton on a weaker dollar, stronger COMEX premiums, depleted inventory levels, and lower-than-expected global production. 


Copper Breaches 10k USD: Easy Journey to 11k USD/Ton On Lower Inventories In The Short Term

<ul>
<li>In our note <a href="https://www.smartkarma.com/insights/post-results-fy24-mine-by-mine-plan-production-commentary-on-copper-from-global-listed-companies" target="_blank" data-smartkarma-citation="insights:179155" rel="noopener">Post Results FY24: Mine-By-Mine Plan Production + Commentary on Copper From Global Listed Companies</a>, we noted a mid-point guidance of 575,000 tons for <a href="https://www.smartkarma.com/entities/ivanhoe-mines-ltd" target="_blank" data-smartkarma-citation="entities:25338:1" rel="noopener">Ivanhoe Mines (IVN CN)</a>.</li>
<li>The company revised this midpoint guidance down substantially to 400,000 tons following the discovery of Seismic activity in the Kakula mines (a 0.7% downward revision of global refined production). </li>
<li>The Kamoa-Kakula mine is the 4th largest mine in the world, and the mid-point guidance post 2027 was to ramp it beyond 700,000 tons. </li>
</ul>


In our note Post Results FY24: Mine-By-Mine Plan Production + Commentary on Copper From Global Listed Companies, we noted a mid-point guidance of 575,000 tons for Ivanhoe Mines (IVN CN).
The company revised this midpoint guidance down substantially to 400,000 tons following the discovery of Seismic activity in the Kakula mines (a 0.7% downward revision of global refined production). 
The Kamoa-Kakula mine is the 4th largest mine in the world, and the mid-point guidance post 2027 was to ramp it beyond 700,000 tons. 


Ivanhoe's Massive Guide Down And Copper Supply Impacts

United States

Southern Copper Corporation conducts mining operations in Peru and Mexico.  The Company owns and operates open pit mines and metallurgical complexes that produce copper, molybdenum, zinc, and precious metals.

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Southern Copper (SCCO US)

COMEX Spread Destroyed By Trump, Long-Term Copper Still Great

Madness in the markets persist with Trump destroying the COMEX prices by showing leniency on pure copper imports. Despite this, the long-term...

Sameer Taneja

Bullish Copper: Comex-LME Spreads Off The Charts + Positive China TSF Data

Ahead of August 1st, the U.S. is set to impose a 50% tariff on copper imports. We analyze expected stockpiling on the COMEX and identify potential...

Sameer Taneja

Peruvian Copper Supply Disruptions Gaining Momentum: Bullish Copper, Back To Over 10k USD This Week?

Peru's informal miner strikes may disrupt Las Bambas and Constancia, risking short-term tightness in global copper supply, given Peru's nearly 10%...

Sameer Taneja

Copper Breaches 10k USD: Easy Journey to 11k USD/Ton On Lower Inventories In The Short Term

We project copper to rally to $11,000/ton soon, driven by dwindling inventories, supply disruptions, high COMEX premiums, and a weaker dollar.

Sameer Taneja

Ivanhoe's Massive Guide Down And Copper Supply Impacts

We detail another major event that could further push the copper market into deficit in the short term for CY25, potentially exceeding 400,000 tons.

Sameer Taneja

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