LONDON- Global copper smelting activity declined in October due to fears of a recession, weak demand and maintenance shutdowns, data from satellite surveillance of metal processing plants showed on Friday.
Smelting activity fell in all regions except North America, according to a joint statement from commodities broker Marex and SAVANT, the satellite analytics service Marex launched with Earth-i in 2019.
“Lower turnover is a natural consequence of bear markets in derivatives, as is lower output through the supply chain in the physical marketplace,” said Guy Wolf, global head of analytics at Marex.
Earth-i, which specializes in geospatial data, tracks smelters representing 80 percent to 90 percent of global production. It sells data to fund managers, traders and miners, and also publishes a free monthly index of global copper smelter activity.
Its global copper dispersion index, a measure of smelter activity, fell to 47.5 in October from 49.0 the month before.
The dispersion index for China, the world’s biggest refined copper producer, fell for a fifth straight month in October to 44.3 from 44.8 in September.
“In China, tightness in scrap supply also appears to be weighing on smelter utilization rates,” the statement said.
Under the dispersion index, 50 points indicate that smelters are operating at the average level of the past 12 months. It also has a second index showing the percentage of active smelters.
In nickel, global smelting activity fell in October, largely due to weakness in nickel pig iron (NPI) output in China.
The global dispersion index for nickel dropped to 45.4 in October from 51.3 in September.
Thirteen of China’s 31 NPI plants were inactive at the end of October as stainless steel demand remains weak.
“In Europe, nearly two thirds of capacity is now seen as inactive due to a combination of a recessionary macroeconomic environment, deep discounts for ferronickel compared to class 1 metal and prohibitively high electricity costs,” the statement said.
Copper prices vaulted to the highest level in six weeks on Friday as the dollar plunged and more rumors swirled about China loosening its strict COVID-19 measures.
Other industrial metals also raced higher as investors scrambled to cover bearish positions while oil rallied and stocks rose.
Three-month copper on the London Metal Exchange (LME) shot up 7 percent to $8,093 a ton by 1700 GMT, the biggest one-day gain since January 2009 and its highest since Sept. 13.
USComex copper futures HGcv1 jumped 7.5 percent to $3.68 a lb.
A former Chinese disease control official on Friday said that China will soon make substantial changes to its COVID-19 policy but did not give the basis for that information.
Other unverified reports emerged this week that top metals consumer China would move closer to the rest of the world in removing coronavirus curbs.
“Our China economist is very sceptical about these rumours. He reckons that, with the low level of vaccination, the government is not going to move any time soon,” said Caroline Bain, chief commodities economist at Capital Economics.
“Markets can often move ahead of the event,” she added.
The market also received a shot in the arm from a tumble in the dollar index, which extended losses after US jobs data tempered expectations of fast-raising interest rates to fight inflation.
