Copper, oil, steel analysis Roundup.


India joins the EU in attempts to slow down imports of aluminum and copper into the country
Crude oil prices closed 1.92% lower this week after gaining nearly 10% and closing above the $40 mark
Since the beginning of the year, the US steel production rate is 20.1% lower than in the same period of the previous year

Copper prices fell 4.65% this week, following the vast majority of other commodities down. Crude oil prices also closed lower at almost 2%, but still managed to push through a closing price of over 40 dollars per barrel. Silver prices plummeted by almost 15% to reach a 2-month low.

Copper imports limited

India wants to slow down the import of aluminum and copper into the country. On the other hand, oil prices rose because several oil companies failed to meet their production cutbacks. The capacity utilization rate of the US steel sector also collapsed after rising for several months in recent months.

India is striving to follow in the footsteps of the European Union and limit the influx of aluminum and copper into the country. As a result, India has launched an import monitoring program that will require importers to record and report their import volumes, said Stuart Burns of MetalMiner.

“Only by collecting hard data can the country develop a sensible policy, argue the proponents of the program,” he said.

“As such, China, Japan, Malaysia, Vietnam and Thailand are major exporters of copper. These countries accounted for 45% of India’s US$5 billion copper imports for the period 2019-2020, the article said.

Copper mine production was also affected by the pandemic, especially in Peru. According to reports from the International Copper Study Group, production fell by 1% in the first half of the year. Mine production in Peru collapsed by 20% in H1 2020. In addition, production decreased by 38% from April to May after being shut down due to the pandemic and adverse weather conditions.

Copper Weekly Chart (TradingView)

Burns said the logistics sector is full of uncertainty and high costs. People who cheer the idea of a “decoupling” of trade relations between the U.S. and China may slow down, as this is likely to happen for the time being.

“A fair share of the current pressure on cargo space and costs comes from the increase in trade between Asia and the US,” Burns said.

“The pandemic has boosted demand for goods manufactured in China, from electrical equipment such as laptops and related electronics to PPE equipment, including masks and gloves.

Copper prices fell over 4.5%, closing below the key support line at $3.00. The bearish close has now opened the door for a deeper correction to $2.80 and $2.68.

Focus on oil production

Oil prices have recovered from their low levels at the beginning of this year, but are still below 2019 levels, even after OPEC+ ordered production cuts. While this decision has helped to stabilize prices, some oil producers have not strictly adhered to the reduction requirements.

“The incentive to cheat is enormous,” Burns said. “The feeling of many smaller players that they suffer more from production agreements than the ‘big players’ sometimes creates a sense of resentment.

Burns noted that this is particularly true for parties who have nothing in common except the intention to increase oil revenues.

Weekly Crude Oil Chart (TradingView)

“Thus the Saudi oil minister, who thinly veils the OPEC partners United Arab Emirates, Nigeria and Iraq because of overproduction, meets with protests, but hardly any immediate compliance.

Brent crude oil has recovered in the past three months and remained close to the 40 dollar per barrel mark after oil traders pushed the “black gold” below 13 dollars per barrel earlier this year. Crude oil prices closed the week 1.92% lower, a week after gaining nearly 10% to close above the $40 mark.

If the fundamentals of the industry improve, crude oil prices could eventually top $50 before year-end.

Steel capacity utilization rate declines

The capacity utilization rate of the US steel industry also fell last week, after rising for most of the past few months. In the week to September 19, the steel capacity utilization rate fell to 64.5% from 65.1% last week.

The US steel production rate since the beginning of the year is 20.1% lower than in the same period last year. Despite weak domestic demand, India is now a net exporter of steel to China and other countries.

Steel Rebar weekly ticket (TradingEconomics)

Indian steel producers exported around 80% of their production in the period from April to August. China accounted for 45% of India’s total steel exports in the same period.

Steel prices fell in September, just a few weeks after the pressure of the year’s high of almost $3,800.


India plans to curb the import of aluminum and copper into the country, just like the EU. Elsewhere, oil prices have risen again after some oil producers failed to meet their production reduction targets. In addition, capacity utilization in the US steel sector has also fallen, after having risen for several months in recent months.


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