Dr Copper building potential head and shoulders formation

[swissaustrian]

This technical picture doesn't look good at all. Copper, the only commodity with a phd in economics could be about to fall of a cliff:

 

[ancona]

Well........let's hope for my sake Dr. Copper hangs on by his fingernails long enough to allow me to recycle the ten tons of copper from the Merritt Island Tracking Station, because that's what I'm pulling out of conduits right fucking now.

 

[DCFusor]

You should hurry. Copper is called the doctor because it kind of predicts world growth.
The only upside is it might be a buying opp for FCX - but you'd only want that once things were starting to look actually good again. Maybe not so soon.

 

[swissaustrian]

Well........let's hope for my sake Dr. Copper hangs on by his fingernails long enough to allow me to recycle the ten tons of copper from the Merritt Island Tracking Station, because that's what I'm pulling out of conduits right fucking now.

Sell it forward (or use put options as a hedge) if you know when and how much you are going to recycle :wave:
Even if it goes up against your expectation, at least you're locking in the current price level and you eliminate downside risks.

 

[swissaustrian]

The technical picture for copper just got a lot uglier, it could be falling off the right shoulder these days. Also look at the massive selling volume:

 

[ancona]

Well, since I am currently pulling 66 miles of wire/feeders/cables at teh MILA treacking station, I am quite interested in this chart. Penny at Trademark metals is holding $3.25 for April for me so we are pulling like a madman. The trouble is that I get nearly a dollar a pound delta between #1 insulated and bare bright which is stripped. I bought a stripping machine but it si pretty slow going with the one person we have processing metals right now. I have ten thousand pounds at the shop, but another thirty=forty thousand pounds of big stuff to do yet, and I'm praying the bottom doesn't fall out like in fall of '08.

 

[swissaustrian]

ancona, like I posted above, given the amount of metal you're pulling out I'd strongly advice you to either sell the copper forward at a fixed price today or to buy protection via put options. If you need a more detailed explanation of such transactions, I'm ready to help

 

[ancona]

SA,
It's physical metals we have, which we stockpile ten thousand pounds at a time then strip and sell. The #2 insulated and low-yield stuff we sell immediately in 40 cubic yard dumpsters for significantly less. I don't have any way to hedge. Period. When you deal with salvors and recycle yards, they have contracts to deliver fixed amounts of metals to dealers in boat-load quantities, and they have a fixed amount of time within which to fill the order. That is the only way she can hold my price, by calculating total anticipated yield of metal from my project and adding the tonnage to her order.

 

[swissaustrian]

Rather surprisingly, copper managed to have a significant rally last week. Even with the bad GDP print. The real decision point is still outstanding, though. It has to get above $3.95 to be on the safe side:

 

[ancona]

Trademark gives me pricing through the month. Monday I get my new buy prices and I have already been notified that the term will be shortened to two weeks, as my buyer, Penney, says she doesn't have as many smelters purchasing scrap as she did earlier in the year. I think copper hit it's peak a while back and that we may soon see pricing as low as a buck fifty a pound for bare bright scrap. Penney agrees with me, and she is worried about the summer months if shit falls off a cliff because she makes 25% of her pay package on commission.

 

[swissaustrian]

Why Dr. Copper is Looking Ill
Traders like to refer to the red metal as Dr. Copper because it is the only one that has a PhD in economics. This year it has been proving its credentials as a great predictor of future economic activity once again.
Copper has been leading the downside charge for all risk assets since it peaked on Feb. 10. After looking at the latest trade data for the red metal, it is clear that it has a lot more bleeding to do. This does not bode well for risk assets anywhere.
The harsh truth is that copper stockpiles in China, which accounts for 40% of global consumption, are the highest in history. Estimates for the size of current stockpiles in country run as high as 3 million tonnes, with a stunning 918,000 tonnes coming in during the last six months. Consumption totaled only 1 million tonnes in Q1, 2012, and could fall to as low as 1.7 million tonnes over the remaining three quarters. The mismatch is huge, and makes the current price of $3.64 a pound look pretty expensive.
This imbalance is occurring in the face of a slowing Chinese economy. Only this week, the Chinese purchasing managers index for April came in at 49.1, well below the boom/bust level. Residential real estate, the largest consumer of copper in the Middle Kingdom, has clearly been in a bear market since last year.
The grim outlook is expected to make a serious dent into the profits of major producers, BHP Billiton (BHP), Freeport McMoRan (FCX), Rio Tinto (RIO), and Anglo American (AAUKY.PK), and Xstrata (XTA.L).
If the risk off scenario continues through the summer, then a $3.25 downside target is a chip shot. Remember that the 2009 low was positively subterranean $1.25 a pound. Bring in a real summer slowdown, and lower prices are within reach. Professionals will be selling the futures on any decent rally. Individuals can sell (CU) on market, are buy near money puts.

http://www.resourceinvestor.com/2012/04/27/why-dr-copper-is-looking-ill

 

[pmbug]

Dr. Copper has the pulse until the markets break (currency concerns boil over). Sounds to me like one indicator that the precious metals are going to remain on sale for a little while longer. Then again, if peeps on ZH are correct, the negative expectations may be positive for precious metals as the market anticipates more QE.

 

[swissaustrian]

One week later, copper is at a key decision point. It didn't make new highs. The question is now: Is it going to drop below the 200dma or not? If so, we're going down quick imho:

 

[ancona]

I have been watching copper leak lower for a couple of weeks now. We're pulling the last feeders out from some duct banks right now, and I need to run it all through the stripper before my price hold expires next Thursday. I'm still getting 3.25/# for bare bright as of now, but stand to be dropped down next Friday morning depending upon the spot price of copper and whether or not Penny has filled her last big scrap order for delivery.

 

[swissaustrian]

Dr Copper's right shoulder is forming textbook style here. Volume is pretty high, too. Short-term momentum is overbought, so we might see a rebound next week:

Close up:

 

[DCFusor]

I've just been watching the FCX ticker - it's near historic lows. If the world as we know it doesn't end, it's about to be a really nice buying opportunity. Made tons swing trading this one - the management is very good. Waiting...

 

[ancona]

We're on pins and needles here at the shop, since we're sitting on better than twenty five thousand pounds of some big ass feeder wire. We are able to strip around a ton to a ton and a quarter a day, so it goes kind of slow. If copper takes a nose dive, we may have to simply chuck it all in a 30 yard open-top and sell it all as #1 insulated, just to stop the losses. So far, pricing has held, but Penny is telling me she nearly has her last order filled and may have to change pricing early, because the only other big order she has for bare bright is not very large, and is at a lower price. She intimated at as much as thirty cents a pound less than I am getting now. Maybe she has better insight than Mr. market does, or maybe the market has actually become saturated, but if I don't ramp up production, I could lose thousands.

 

[swissaustrian]

Copper inventories at the COMEX and at the LME are spiking higher while Gold inventories are plunging. Still, both prices have been falling.

Copper inventories:

The cooper price is at key support here in the 3.2 area:

 

[ancona]

Dr. Copper is a scary son-of-a-bitch these days. I'm finishing up a big project within which I get all the copper, feeder lines, buss bars, transformers etc. from the old CCAFS clinic. this is the building where Mercury Redstone astronauts and Gemini astronauts were checked out pre-flight. There is a lot of heavy wire in there, but with copper salvage prices dropping we're not going to do as well as we hoped we would at bid time last September.

 

[pmbug]

Looks like the COMEX will have a buffer for any pending supply shock from the Kennecot Utah mine collapse.

 

[swissaustrian]

Copper is now sitting right at the 3.2 support. If it fails there, we're at 3.0 in a rush.

 

[swissaustrian]

Copper touched 3.05 overnight in Asia. It has recovered to 3.155 but the important support at 3.2 is broken. My guess is that we're gonna be at 3.0 again soon.

 

[benjamen]

A) This is yet another bearish indicator for the global economy. I for one really don't want to go through another 2008 scenario.

B) What is the cost to mine for copper? At what spot price would copper miners not be able to mine profitably?

 

[swissaustrian]

The massive buildup in warehouse inventory at the LME is a very bad sign for the world economy.

 

[searcher]

Why Mining Giant Rio Tinto Is Benefitting From The EV Boom​

Dec 2, 2023

13:28

Copper mines, like this one in Utah, are on the frontline of America’s transition to clean energy. This site, owned and operated by mining giant Rio Tinto, produces roughly 200,000 metric tons of copper annually — with room to grow. Global demand for copper, a major component of EVs, is expected to almost double from 25 million metric tons to nearly 49 million metric tons by 2035. But miners face a multitude of issues as they ramp up production, not least of which includes mitigating environmental damage, addressing the concerns of the local stakeholders, and operating in remote regions of the world.

Based in the UK, Rio Tinto is one of the world’s largest mining companies with projects in 35 countries. In addition to its 17 iron ore mines in Western Australia that produce material used in steel, its products include aluminum, diamonds, and boron, a component in fertilizer and smartphones. Historically miners have been known for their environmental impact but today are increasingly recognized as crucial players in the transition to green energy. So what is Rio Tinto doing to ramp up production of its critical minerals business and how will China’s economic slowdown impact its iron ore sector? CNBC got a behind the scenes look at Rio Tinto’s Utah operation to find out.

 

[searcher]

Inside Rio Tinto’s most advanced mine​

Oct 22, 2023

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