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The ICSG say copper production is stable and Chinese demand remains firm

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(Kitco News) - The latest International Copper Study Group (ICSG) report has shown that despite a decline in Australia (-3.5%) global copper production remained stable. This is impressive as the world's mining firms have had to deal with mine closures due to the COVID-19 pandemic. 

The report stated “COVID-19 related constraints and other operational issues also resulted in declines in production in other major copper mine producing countries, most notably Australia, Mexico and the United States,”

Last year, world copper production grew by around 1.5 per cent in 2020, while primary production was up by 2.8 per cent. The preliminary data did not include specific production numbers for Australia.

Looking closer into the other major nations Chile's FY output declined by 1% and Indonesia's increased by a massive 39% due to a transition of ore zones at its two major copper mines.

Preliminary data from the ICSG suggests the world’s refined copper balance for 2020 had a deficit of 560,000 tonnes due to strong Chinese demand. However, outside China copper usage declined by 10% and the strong Chinese demands was confirmed as the nation saw a 38 per cent (1.2 million tonnes) boost to its copper imports for 2020.

According to the Australian Bureau of Statistics, Australia’s copper exports grew from $10.2 billion in 2019 to $10.4 billion in 2020. The Australian resource sector added $116 billion in exports revenue to Australia’s economy last year, up from $96 billion in 2019.

Looking at the CME copper futures daily chart, the price rise in 2020 has been pretty impressive. At the moment the price of the red metal has stalled slightly near the $4/lb area. On the technical front, the bulls will be looking to break the $4.37 area to try and keep this trend moving but the move higher in the greenback could be hindering that move. On the downside, the consolidation low is holding at $3.84/lb and if this level breaks it could signal a deeper retracement. The volume peaked at the highs and it would be a good confirmation signal if any new price rise was accompanied by a rise in the volume again. 

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