According to the London Metal Exchange on Monday 28th July 2014 world Copper prices appear to have stabilized despite rising global demand putting inflationary pressures on the price. This is a direct result of the American natural resource company Freeport-McMoRan who has an industry leading global portfolio in mineral assets, significant oil and gas resources and a growing production profile. Yesterday Freeport was able to settle a six month long tax dispute with the Indonesian government, allowing for the resumption of Copper exports from major Indonesian mines such as in the Grasberg mineral region in West Papua (containing approximately 35.6 billion pounds of Copper) to key global Copper consuming nations such as China and India. Freeport-McMoRan is expected to export approximately 756,000 tonnes of Copper in the second half of 2014.
Settlement of this on-going tax dispute has doused the predominately bullish global Copper market in cold water despite sturdy factory growth in both China and the Euro-zone strengthening the overall world demand for Copper ore throughout the month of July. Additionally, economic data from Beijing has confirmed that the Chinese economy has weathered the economically choppy first half of 2014 and is expected to return to calmer waters where economic growth and expansion can really regain traction. This emphasizes that the Copper industry is finally solidifying its expected movement away from a demand-basis and more toward supply-surplus, ultimately stabilizing the previous up-and-down nature of world Copper prices throughout the first half of 2014.
Furthermore, the London Commodity Futures Trading Commission has highlighted that global Long-positions of Futures and Forward contracts on Copper have peaked at an eight year high and have begun their descent into a predominately short-positions as world Copper supply moves into surplus, relieving excess demand and putting deflationary pressures on Copper prices. This is particularly so on the back of the news of Indonesia re-initiating their exports to major international Copper consumers such as China via Freeport-McMoRan.
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Zenn B.//SMC Editor