GLOBAL COPPER SMELTING ACTIVITY HITS YTD HIGH IN MAY AS PRICE SURGE STIMULATES SUPPLY RESPONSE
Every region saw month-on-month increases, continuing the trend seen in the latter part of April, when activities started to rebound from historically low levels in response to higher copper prices. Towards the end of the month, there were though signs of divergences as Asian smelters entered their seasonal maintenance periods, whilst the RoW activities continued to accelerate.
Following recent enhancements, SAVANT now provides daily updates for global and regional indices, as well as China national and regional indices, accounting for ~90% of global copper smelting capacity.
May 2021 observations include:
- The global activity dispersion index averaged 49.4. for the month, which is a return to the long-run average levels after the record lows of March.
- The China index rose to 48.9, the highest since January, but weakened through the month as maintenance periods began.
- Asia ex-China exhibited a similar profile to China with activity levels at 51.5, far above the lows of March but softened as the month progressed.
- North America has been the slowest region to recover, registering a relatively weak 38.9 in May. This is above YTD lows, but remains significantly below the long-run average of 50. The monthly trend for the month was however positive and June readings, so far, are already showing levels of activity in line with the longer-term average.
- Europe’s readings were similar to North America, with activity readings of 45.7 in May, far-above the lows of March and early data for June suggesting much stronger readings lie ahead.
- South America was the stand-out region in May with a reading of 59.2 and the early data from June, if sustained, indicates record activity levels for this region.
* – Index values go back to March 2016
Dr Guy Wolf, Marex’s Global Head of Analytics, commented: “The SAVANT indices are finely-tuned to global copper dynamics with the record low levels of smelter activity identified in March leading to an explosive price rally for refined copper. The natural supply response to that became evident in the data towards the end of April and has continued throughout May – hence the consolidation in copper prices. We are now entering a fascinating period, where seasonal declines in smelter activity in China and the rest of Asia are to be expected, and other regions showing no signs of slowdown. Given the importance of Chinese demand, it remains to be seen if the external supply can satisfy China’s demand during this maintenance window.”
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.
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