Pinnacle Activity Ticker
Copper Bulls Moving On London Metal Exchange
The London Metal Exchange, the World’s largest metals exchange, reports that Copper stockpiles from the US to China are at 2.5 yr lows and set to decline further.
The news has awakened the Copper Bulls to move speculation, sentiment and pricing North.
The Overall Technicals:
May NY Copper closed up 725 pts to 377.25 cents Thursday. Prices closed near the session high, and saw more Short covering and bargain hunting. The Key outside markets were in a Bullish posture for Copper as the USD Index was weaker and Crude Oil prices were firmer. The Copper Bulls gained some new Northside technical momentum Thursday and are now on a level near-term technical playing field with the Copper Bears.
The Copper Bulls’ next Northside breakout objective is pushing and closing prices above Key technical resistance at 380.00 cents.
The next Southside price breakout objective for the Copper Bears is closing prices below the Key technical support at the April lows of 356.90 cents. 1st resistance is at Thursday’s high of 377.45 cents and then at 380.00 cents.
1st support is seen at 375.00 cents and then at 372.50 cents.
Back to the Fundamentals
Coupled with China’s 18 February cut in reserve requirements (RRR) for banks, which went into effect immediately, and there is plenty of cash out there for industry to buy the Copper they need for everything from construction to power cords.
The prime issue is that the tight Copper supply looks to be moving into its 3rd consecutive annual shortfall.
Between China and the United States, roughly 55% of the World’s Copper is spoken for. China alone consumes nearly 40% of Global mine output, which created a 119,000-ton shortfall in November 2011.
Analysts estimate a Copper shortage of 376,000 tons in Y 2012, and continued undersupply through Y 2013.
Any up-tick in demand should benefit Copper miners and refiners.
In a Keynote address at Byron Capital Markets’ 3rd annual conference on electric metals in Toronto last week, Jack Lifton warned that the prospect of Copper shortages should be of far greater concern than rare earths, graphite and lithium.
“The Copper crisis will make the current Rare Earth crisis look minor by comparison,” says Mining Weekly.com’s Jack Lifton. Mr. Lifton describes Copper as the “nerves of civilization.” .
According to Mr. Lifton, the global Copper industry is not increasing output as fast as demand for the Red metal is growing.
In has Keynote speech Mr. Lifton admonished the World of essentially ignoring it and quoted statistics from the International Copper Association (ICA) that showed that the growth of Copper production last year was in the order of 4% of the gross, and the gross was about 17-M tonnes.
“Since Chinese demand is increasing, guess what happens unless you can continue producing copper at just a 4% increase,” he queried. “At some point in time we run into another crisis that will make the rare earth crisis minor by comparison.”
China is now building a new grid for 500-M people. That is like doing North America over again, from scratch plus.
Virtually everything now depends on moving electrons around on Copper wire. And we are approaching the point where there’s not enough Copper to make the necessary wire.
The head of materials technology for the General Motor’s (NYSE:GM) Chevrolet Volt reports that the car contains miles and miles of Copper wire, and that GM engineers had to design the car so that it would be difficult for thieves to strip the Copper wire from the power train.
We are now in an era of expensive Crude oil and rising commodity prices, thieves will not just siphon gasoline from the fuel tank. They may also try to strip the wiring from electric cars.