GLOBAL COPPER SMELTING ACTIVITY AT MULTI-YEAR LOWS DURING MARCH AS COST PRESSURES BITE
01 April 2021 – SAVANT, a unique geo-spatial analytics product launched in October 2019 by Earth-i and Marex Spectron, showed global copper smelting activity in March was the lowest monthly average recorded in the dataset (since March 2016). This exceptionally weak reading occurred due to an absence of any rebound in Chinese activity following Chinese New Year with no off-setting strength from other regions.
March 2021 observations include:
- March 2021 saw the global activity dispersion index average 39.8, the lowest ever monthly average (previous low was 40.4 in July 2020).
- The China index fell to 40.7, the lowest since Aug 2020 (39.3), completing a very weak first quarter after recording 55.5 in Dec 2020.
- North America, which had begun to show early signs of recovery, returned to weakness with a reading of 32.3, the lowest since last July (24.9). However, maintenance outages were unusually high during the month.
- In Europe, the monthly average reading of 32.4 replaced the 35.8 recorded in March 2018 as the all-time low for the region.
- Elsewhere, Asia ex-China also set a new all-time low with a reading of 34.9, compared with the previous record low of 40.2 in Sep 2019. South America was relatively robust with a reading of 47.2.
* – Index values go back to March 2016
Dr Guy Wolf, Marex Spectron’s Global Head of Analytics, commented: “The margin pressures smelters face from a shortage of concentrates has been closely followed but activity within Asia seems highly sensitive to that factor. With LME Copper prices averaging almost $1500/tn higher in Q1 than the previous quarter, some softness in demand is leading Asian smelters to respond by significantly curtailing activity, albeit not entirely shuttering. In addition, the lockdowns in Europe, combined with maintenance elsewhere, have resulted in this exceptionally weak activity level globally. Whilst some relief to buyers might come from the recent correction in copper prices, the tightness in concentrates will continue to support refined material price levels.”
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 up to 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 subscribers unprecedented levels of coverage, accuracy and reliability. This dataset allows users to make better informed and more timely trading decisions.
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 brokerage, with significant market share of many major Agricultural, Metal and Energy products. Headquartered in London, Marex Spectron’s extensive international network covers Europe, Asia and North America markets. State-of-the-art electronic and voice broking services facilitates all types of trading strategies. This is backed by decades of experience, with Marex Spectron placing great emphasis on intellectual knowledge and insight, alongside access to extensive data sets and the latest analytical tools. Its clients are commodity producers and consumers, banks, hedge funds, asset managers, brokers, commodity trading advisors and professional traders.
For more information visit www.marexspectron.com.