Two Critical Items — One Big And One Small — For Copper

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Two Critical Items — One Big And One Small — For Copper

A couple of very important notes for the copper market the last few days. Which have the price for the red metal once again showing unexpected strength.

The first was a major headline across mining news outlets on Wednesday: the sudden resurgence of the red metal imports into the key market of China.

Reuters reported that China’s March copper imports actually hit an all-time high — at 570,000 tonnes for the month. Representing a notable 39% increase from the same month in 2015.

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That was enough to lift China’s total Q1 copper imports to 1.43 million tonnes — an increase of over 30% as compared to the year-ago period.

That news got the market excited, lifting the the red metal  price off the $2.10 per pound mark where it had been languishing — and back toward $2.20. Stemming a decline in the price that had been in motion since late March.

And even as all eyes were on the the red metal price, another less-reported news item emerged in Australia. Showing that some buying action may also be ahead when it comes to copper stocks.

That was a report from the Sydney Morning Herald that several Chinese miners are accelerating their hunt for copper assets. With the paper interviewing officials from PanAust — a former ASX firm, now controlled by Chinese conglomerate Guangdong Rising Asset Management — who said they’ve been given a mandate to go out and acquire copper projects globally.

PanAust said that it has been in “several” data rooms lately looking at potential copper projects. Suggesting that we could see this China-backed firm pull the trigger on an acquisition soon.

And that’s not the only Chinese company apparently in the hunt for new projects. With the same report also noting that China Molybdenum Company is similarly seeking global copper assets for purchase.

All of which suggests that interest in the red metal is stronger than many investors believe right now. And we could see some big purchases coming — both in physical metal and in mines and development projects. Watch for announcements on both.

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Dave Forest writes Pierce Points Free Daily E-Letter, an advisory on mining and energy read every day by BP, Rio Tinto, JPMorgan, BNP Paribas, Repsol, GDF Suez, GE, Platts, Warburg Pincus, and the UN. Sign up for free at www.piercepoints.com. Mr. Forest has funded and managed over $80 million in global exploration and development in natural resources, and continues to design and develop projects globally. He is a professional geologist.
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