Copper smelting activity enters 'fascinating period'

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Its global activity dispersion index averaged 49.4 for May, a return to the long-run average levels after the record low of 39.8 March. 

The platform, which monitors about 90% of smelting capacity, put the rise down to copper's price surge stimulating a supply response.

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Marex global head of analytics Dr Guy Wolf said the record low levels of smelter activity in March had led to "an explosive price rally" for refined copper.

The red metal reached a 10-year high above US$10,000 per tonne in May on the London Metal Exchange.

"The natural supply response to that became evident in the data towards the end of April and has continued throughout May - hence the consolidation in copper prices," he said.

"We are now entering a fascinating period, where seasonal declines in smelter activity in China and the rest of Asia are to be expected, and other regions showing no signs of slowdown.

"Given the importance of Chinese demand, it remains to be seen if the external supply can satisfy China's demand during this maintenance window."

The China index rose to 48.9 in May, its highest point since January, but weakened during the month as maintenance periods began.

South America was the "stand-out region" with a reading of 59.2 and early June data indicating record activity levels.

North America has been the slowest region to recover, according to SAVANT, registering 38.9.

Europe had activity readings of 45.7 for May, up from 37.7 in April, and Asia ex-China was at 51.5.

Readings in the activity dispersion index above 50 indicate greater activity levels than average.