GLOBAL COPPER SMELTING ACTIVITY DURING JULY DROPS SHARPLY TO MULTI-YEAR LOWS
18 August 2020 – The SAVANT platform, a unique geo-spatial analytics product launched in October 2019 by Earth-i and Marex Spectron, shows a significant decline in global copper smelting activity during July, which is in sharp contrast to the robust recovery observed in recent months.
The unusually swift decline coincided with a record amount of maintenance outages observed globally and follows a period of unusually low maintenance at Chinese sites relative to seasonal norms. This suggests that the strength in smelting activity in recent months may be partly due to deferred maintenance.
July Observations:
- July 2020 saw the global activity dispersion index average 41.5, the lowest reading since March 2018 (40.8).
- The China Activity Dispersion Index dropped to 43.1, the lowest since December 2019 (42.6). This was the first month in 2020 that the index has recorded a level below 50 (representing average activity levels basis historical observations).
- North America, which recorded the lowest ever quarterly average in the first quarter, saw a new low in the second, and has now started the third with its lowest ever monthly average*. The activity dispersion index averaged 26.2 for July, with 2020 now accounting for five of the lowest seven monthly readings in the database.
- Other regions also saw declines in activity levels, but not to the same levels as China and North America.
* – Index values go back to March 2016
Dr Guy Wolf, Marex Spectron’s Global Head of Analytics, commented: “Global activity levels overall have been propped up in recent months by the extremely strong readings coming out of China. With China now seeing more maintenance, the weakness globally is starker. In June we saw larger Chinese smelters increase activity as smaller sites went into maintenance, but this did not persist into July. As a result, overall activity levels fell sharply as the smaller sites still seem to be locked out of the market due to input cost pressures. Although we are heading into a traditionally weaker period for smelting activity, all seasonal norms have been thrown out of the window this year. What is particularly striking is the sustained period of exceptionally low activity readings from North America. Physical traders will be on the alert in case that leads to strength in premiums in the second half of the year.”
The Activity Dispersion Index is a measure of capacity-weighted activity levels observed at smelter sites where a reading of 50 indicates that current activity levels are at average levels. Readings above or below 50 indicate greater or lesser activity levels than average, respectively. The above chart displays these readings as a weekly rolling average.
The SAVANT Copper platform monitors over 100 smelters, representing around 90% of the smelting capacity for copper around the globe. Using daily updated sources, including extensive use of geospatial data collected from satellites, the index reports on the activities at the world’s smelting plants offering subscribes unprecedented levels of coverage, accuracy and reliability. The SAVANT platform, which includes data going back to March 2016, allows users to make better informed and more timely trading decisions.
To find out more please visit www.earthi.space/savant.
About Earth-i
Earth-i is a geospatial intelligence company using machine learning, artificial intelligence and Earth Observation data to provide unique and relevant insights, derived from diverse geospatial data, that deliver clear decision advantage for businesses, governments and other organisations.
Earth-i provides advanced analytics using automated interpretation of a range of geospatial Earth Observation data sources including colour imagery, colour video, infra-red and radar from a range of sources including satellite, drone, aerial and ground-based sensors. This data is fused with additional data sources to extract factual understanding and generate predictive insights across a range of markets such as commodities, supply chain, agriculture, infrastructure and defence.
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About Marex Spectron Group Limited
Marex Spectron is a leading global commodities specialist providing clients with extensive access to financial and physical markets across Metals, Agriculture and Energy. The firm provides comprehensive breadth and depth of coverage across four core services: Market Making, Commercial Hedging (both on exchange execution and clearing, and OTC derivatives), Price Discovery and Data/Advisory. It has the dominant franchise in many major Metals, Energy and Agricultural products, executing around 31 million trades a year and clearing over 183 million contracts. The firm provides access to every major commodity market in the world, covering a broad range of clients that include the largest commodity producers, consumers and traders, banks, hedge funds and asset managers.
For more information visit www.marexspectron.com.
