{"id":1172906,"date":"2020-03-20T15:36:12","date_gmt":"2020-03-20T21:36:12","guid":{"rendered":"https:\/\/www.mining.com\/?p=1017687"},"modified":"2020-03-23T11:00:12","modified_gmt":"2020-03-23T17:00:12","slug":"chart-40-year-cost-curve-shows-copper-price-route-likely-over","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1172906","title":{"rendered":"CHART: 40-year cost curve shows copper price rout likely over"},"content":{"rendered":"<p><em>UPDATE: Copper continued to slide on Monday, down more than 3% to trade at $2.097 a pound in New York in lunchtime trade.<\/em><\/p>\n<div class='d-flex justify-content-center d-xs-block d-sm-block d-md-none'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>Copper was trending lower again on Friday, a day after <a href=\"https:\/\/www.mining.com\/copper-price-in-rally-for-the-ages\/\">staging a spectacular comeback <\/a>from levels last seen during the global financial crisis more than a decade ago.<\/p>\n<p>Copper trading in New York was pegged at $2.132 a pound ($4,700 a tonne) in afternoon trade, on track for a weekly decline of nearly 14% and the lowest close since early 2016, which marked the bottom of a brutal downcycle for commodities. <\/p>\n<p>A <a href=\"https:\/\/capitalmarkets.bmo.com\/en\/industries\/global-metals-mining\/\">study released Friday<\/a> by commodities analyst Colin Hamilton of investment bank BMO Capital Markets makes the case that faced with an unprecedented demand shock, the mining industry needs to get serious about cutting supply:<\/p>\n<blockquote class=\"wp-block-quote\">\n<p>Indeed, there are a number of examples in recent history of meaningful supply cuts marking a nadir in price cycles.<\/p>\n<\/blockquote>\n<figure class=\"wp-block-pullquote alignright\">\n<blockquote>\n<p>Whereas the 2015-2016 period resulted in a &#8220;long duration grind into the cost curve&#8221;, today&#8217;s environment is more akin to the first quarter of 2009 when prices fell rapidly, but then, as now, China was the first to recover<\/p>\n<\/blockquote>\n<\/figure>\n<p>There has been a steady stream of announcements from major copper producers, mostly in South America, outlining production cutbacks and construction delays, over the past week.<\/p>\n<p>Hamilton says uncertainty about the duration of Covid-19-related outages &#8220;is a challenge management teams and boards are dealing with, but as inventories build, ultimately definitive supply adjustment will be required&#8221;.<\/p>\n<p>Whereas the 2015-2016 period where copper was trading below $2.00 a pound ($4,400 a tonne) resulted in a &#8220;long duration grind into the cost curve&#8221;, today&#8217;s environment is more akin to the first quarter of 2009 when prices fell rapidly, but then, as now, China was the first to recover.<\/p>\n<p>As the graph shows, copper is trading below its long term price floor based on the global production cost curve with 14% of copper operations around the world losing money at today&#8217;s price.<\/p>\n<p>Of all commodities, the 90th percentile of the cost curve \u2013 some $5,200 a tonne at the moment \u2013 has worked as a support level best in copper, says BMO:<\/p>\n<blockquote class=\"wp-block-quote\">\n<p>In our view, the price is at a level to drive adjustment, though further falls in the near term cannot be precluded.<\/p>\n<\/blockquote>\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.mining.com\/wp-content\/uploads\/2020\/03\/bmo-copper-cost-curve.jpg\" alt=\"CHART: 40-year cost curve shows copper price rout likely over\" class=\"wp-image-1017713\" srcset=\"https:\/\/www.mining.com\/wp-content\/uploads\/2020\/03\/bmo-copper-cost-curve.jpg 558w, https:\/\/www.mining.com\/wp-content\/uploads\/2020\/03\/bmo-copper-cost-curve-300x260.jpg 300w\" sizes=\"(max-width: 558px) 100vw, 558px\" \/><\/figure>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>New report shows of all commodities, the 90th percentile of the cost curve has worked as a support level best in copper.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center 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