The Mitsui Daily Copper Wrap 8-Nov-19

Table Of Contents Page

Copper Arbitrage & Other Key Data 2
Trump Sows Doubt on Trade Talks With Pushback on Tariff Unwind 3
Top Copper Nation’s Exports Sink to Lowest Since 2017 on Unrest 3
Chile Copper Mining and Port Workers Support Nov. 12 Strike Call 4
Zambian President Lungu Wants to Seek Re-Election in 2021 4
Konkola Copper Says Nchanga Smelter Set for Restart on Nov. 19 4
Codelco Quarterly Output Rose to Year-High in 3Q: Cochilco 4
Preliminary Nov. Michigan Sentiment Rose to 95.7, Est. 95.5 5
U.S. Wholesale Inventories Fell 0.4% in Sept. vs -0.3% Forecast 5
ICBC Standard Bank Plans to Shut Base Metals, Equities Units 5
Global Copper Smelting Activity Rose In October - Satellite Index 6

Attention readers: Please feel free to contact us if you have any questions about an article.

Other Base Metals Currencies U.S. Futures

LME Select 3M Last 1D Δ High Low Contract Settle 1D Δ
Aluminium 1807.50 -3.00 EUR 1.1055 1.1017 Copper DEC 19 268.20 (4.55)
Nickel 16180.00 -125.00 JPY 109.48 109.08 Gold DEC 19 1,462.90 (3.50)
Lead 2111.00 38.50 AUD 0.6906 0.6848 Silver DEC 19 16.82 (0.19)
Zinc 2494.00 16.00 CNY 7.0006 6.9685 Plat. JAN 20 893.10 (20.90)
Tin 16775.00 -170.00 CAD 1.3237 1.3172 Pall. DEC 19 1,708.60 (69.20)
Cobalt 36000.00 0.00 GBP 1.2825 1.2769 Crude DEC 19 57.43 0.28
Molybdenum 0.00 NatGas DEC 19 2.79 0.017

London New York Singapore Tokyo

(44 20) 7489.6721 (212) 878.4192 (65) 6372 8060 (813) 3285.3370
Micki Waite Craig Tuckman Cathy Xu Koji Kasaba
 Copper Arbitrage & Other Key Data

Arbitrage - Volatilities - 50 Delta

US $/t 1D Δ US ¢/lb COMEX Premium to LME Bid Offer Val
Settlement 5,951.5 10.5 270.0 US ¢/lb 1D Δ
Cash MTD 5,888.3 267.1 Cash 0.03 (0.12)
Cash YTD 6,004.4 272.4
Nov-19 (0.26) (0.17)
3M Offer 5,965.5 16.5 270.6 Dec-19 0.09 (0.16) Dec-19 15.25 16.75 15.73
3M MTD 5,908.8 268.0 Jan-20 0.28 (0.30) Jan-20 13.75 15.25 14.60
3M YTD 6,020.1 273.1 Feb-20 0.46 (0.37) Feb-20 15.25 16.75 15.97
Mar-20 0.42 (0.35) Mar-20 15.75 17.25 16.38
Ranges LME COMEX SHFE Apr-20 0.67 (0.27) Apr-20 16.00 17.50 16.64
3M Select DEC 19 JAN 20 May-20 0.62 (0.22) May-20 16.00 17.50 16.84
Open 5,985.00 271.20 6,783 Jun-20 0.75 (0.23) Jun-20 16.00 17.50 17.02
High 5,985.00 272.15 6,807 Jul-20 0.71 (0.17) H2-20 16.25 17.75 17.28
Low 5,905.00 267.65 6,765 Aug-20 0.80 (0.08)
Last 5,923.00 268.20 6,783 Sep-20 0.72 (0.05) Avg-21 16.75 18.25 17.79
1D Δ (78.00) (4.55) 26 Oct-20 0.83 (0.10)
Nov-20 0.96 (0.16) Avg-22 17.25 18.75 18.31
Quarterly & Yearly Averages - Outrights & Spreads Dec-20 0.86 (0.11)
1Q-20 2Q-20 1H-20 3Q-20 Jan-21 1.08 (0.06)
Outright 5,923.0 5,941.75 5,934.7 5,957.5 Feb-21 1.26 (0.06)
Spread -1.00 17.75 10.67 33.50 Mar-21 1.14 (0.06)
Apr-21 1.01 (0.06)

Spreads at Valuation
C-3M 13.25 3-39M 155.50
3-15M 50.00 3-51M 209.50
3-27M 96.75

Warehouse Inventories (mt) Δ From Prior Cancelled Δ From Prior

As-Of Latest Prior Period Period Warrants Reported Day
LME Copper 11/8/2019 235,950 238,550 (2,600) 60,825 (4,925)
COMEX Copper 1 11/8/2019 34,384 34,046 338 - -
SHFE Copper 2 11/8/2019 148,687 149,911 (1,224) - -
Total Copper 419,021 422,507 (3,486) - -
Note: 1 - COMEX warehouse inventory as of close of business for prior trading day than noted in the above header - converted from shorts tons into
metric tonnes; SHFE warehouse inventory is updated weekly

London New York Singapore Tokyo

(44 20) 7489.6721 (212) 878.4192 (65) 6372 8060 (813) 3285.3370
Micki Waite Craig Tuckman Cathy Xu Koji Kasaba
2
 Press Cuttings

Trump Sows Doubt on Trade Talks With Pushback on Tariff Unwind

Bloomberg

President Donald Trump said that the U.S. hasn’t agreed to roll back all tariffs on China, diluting hopes the U.S. would
make such a concession to secure a trade deal. “They’d like to have a rollback, I haven’t agreed to anything,” Trump told
reporters Friday. “China would like to get somewhat of a rollback -- not a complete rollback, because they know I won’t
do it.”

U.S. bonds rallied and stocks slipped after the president’s remarks reduced some of the optimism that had been
increasing around the prospects for a truce. On Thursday, signs were pointing toward a first-phase deal that would
include a tariff rollback. China’s Ministry of Commerce spokesman Gao Feng said negotiators had discussions and
“agreed to remove the additional tariffs in phases as progress is made on the agreement.” White House economic
adviser Larry Kudlow also said Thursday that “if there’s a phase one trade deal, there are going to be tariff agreements
and concessions.”

Trump made clear Friday that the U.S. hasn’t yet reached an agreement and emphasized that he wouldn’t eliminate all
tariffs. There is an expectation that tariffs scheduled for Dec. 15, which would hit popular consumer items like
smartphones and toys, won’t take effect as part of an initial deal. But a lot of tariffs remain in place including a 15% tariff
on an additional $110 billion in goods that took effect Sept. 1. China’s exports and imports continued to contract in
October, data released Friday showed, though slightly less than forecast by economists.

The escalating trade war between the two countries has also taken a toll on U.S. manufacturing and business investment.
Trump also revived questions Friday about the location for signing any deal with his Chinese counterpart Xi Jinping. The
leaders had initially expected to meet at an international summit in Chile this month, but the gathering was canceled
because of protests in the capital, Santiago.

Reports earlier this week indicated any finalization of a first-phase agreement might slip until December and that some
U.S. locations had been ruled out. “Assuming we get it, I don’t like to talk about things until they happen, but it could be
Iowa or farm country or some place like that,” the president said Friday. “It will be in our country, but it could be some
place like that.”

Top Copper Nation’s Exports Sink to Lowest Since 2017 on Unrest

Bloomberg

Exports from the world’s largest copper producer Chile dropped to the lowest in more than two years in October as
the nation grappled with the worst civil unrest in a generation. Exports fell to $2.5 billion from $3.2 billion the year
earlier, the central bank reported Thursday. Chile’s largest copper mines and ports suffered disruptions as miners and
stevedores joined anti-government protests, downing tools and blocking roads.

The last time copper exports were this low was April 2017, after a 33-day strike at BHP Group’s Escondida copper
mine, the world’s largest, slashed output. Those same workers held stoppages again in the past few weeks, together
with miners at state-owned Codelco. Output at Antofagasta Plc’s biggest mine Los Pelambres was also disrupted for
days after a mob broke into the mine, burned equipment and blocked access roads.

The recent disruptions in Chile, which produced just under a third of the world’s copper last year, will further tighten
supplies of the metal. The International Copper Study Group had raised its estimated deficit for the market this year to
London New York Singapore Tokyo
(44 20) 7489.6721 (212) 878.4192 (65) 6372 8060 (813) 3285.3370
Micki Waite Craig Tuckman Cathy Xu Koji Kasaba
3
320,000 metric tons in October. The market will probably post a surplus next year, it said.

Copper prices fell to two-year lows earlier this year amid signs that the trade war between the U.S. and China was
impacting global growth. Prices of the metal used in everything from pipes to electric car engines -- which rose in
October amid the Chilean protests -- rallied on Thursday as tensions eased between the two countries.

Chile Copper Mining and Port Workers Support Nov. 12 Strike Call
Bloomberg

Chile union leaders in sectors including ports, mines, construction, retail, education and health care are supporting a
call for a 24-hour strike on Nov. 12, according to a statement on the website of Chile’s umbrella group of unions
Central Unitaria de Trabajadores, or CUT.
 Unions joining call include Union Portuaria de Chile umbrella group of port workers’ unions, statement says
 Copper mining supervisors will join to support massive citizen protests in favor of equality and social justice,
according to a separate statement by Fesuc umbrella group of supervisor unions
 NOTE: Unions Join Chile Protests as Pinera Strives to Quell Unrest

Zambian President Lungu Wants to Seek Re-Election in 2021

Bloomberg

Zambian President Edgar Lungu wants to contest elections scheduled for 2021 and extend his rule of Africa’s second-
biggest copper producer, he said Friday.

“I’m game,” he told reporters in Lusaka, the capital.

Lungu, 62, has been in power since 2015, when he won an election sparked by the death in office of Michael Sata. He
started his first full five-year term after victory in a vote 18 months later. Last year, the southern African nation’s
constitutional court ruled that he was allowed to contest the presidency for a third time, as the first period as leader
didn’t count as a full term.

Konkola Copper Says Nchanga Smelter Set for Restart on Nov. 19

Bloomberg

Planned shutdown that began last month is progressing well, Konkola Copper Mines says in emailed statement.
 Maintenance shutdown included replacement of worn-out copper-cooling elements, installation of new
refractory lining, refurbishment of acid plant gas cleaning section at cost of $16.5m
 NOTE: Smelter has 311,000 ton/year installed capacity

Codelco Quarterly Output Rose to Year-High in 3Q: Cochilco

Bloomberg

Chile copper miner Codelco produced 439,500 tons of the metal in 3Q, the highest quarterly production this year,
according to a monthly report by Chile copper commission Cochilco.
London New York Singapore Tokyo
(44 20) 7489.6721 (212) 878.4192 (65) 6372 8060 (813) 3285.3370
Micki Waite Craig Tuckman Cathy Xu Koji Kasaba
4
  Quarterly output rose from 398,400 tons in Q2 and 420,800 tons a year earlier
 BHP’s Escondida mine, the world’s largest, produced 100,100 tons of copper in Sept.
 Chile’s second-largest mine Collahuasi churned out 48,800 tons in Sept.

Preliminary Nov. Michigan Sentiment Rose to 95.7, Est. 95.5

Bloomberg

The preliminary University of Michigan consumer sentiment survey for Nov. rose to 95.7 vs. 95.5 prior month.
 Forecast range 92.0 to 98.5 from 52 estimates
 Current economic conditions index fell to 110.9 vs. 113.2 last month.
 Expectations index rose to 85.9 vs. 84.2 last month.
 Expected change in median prices during the next year unchanged at 2.5% vs. 2.5% last month.
 Expected change in median prices during the next 5-10 years rose to 2.4% vs. 2.3% last month.
 Below are comments from the report:
o The early November data found that consumers were more likely to anticipate good rather than bad
times in the overall economy during the year ahead and were more likely to expect a continuous
expansion rather than a downturn sometime in the next five years.
o Householders below age 45 anticipated annual gains in household incomes of 4.4% in early
November, up from 3.9% in last November’s survey

U.S. Wholesale Inventories Fell 0.4% in Sept. vs -0.3% Forecast

Bloomberg

Sept. wholesale inventories decreased to $676.7b vs $679.5b in prior month, the Census Bureau said
 Wholesale inventories forecast range -0.3% to -0.1% from 14 economists
 Aug. inventories revised to 0.1% rise from 0.0%
 Wholesale inventories excluding oil fell 0.4% in Sept.
 Wholesale sales unchanged in Sept. after falling 0.1% the prior month
o Wholesale sales excluding automobiles rose 0.3% in Sept.
 Inventory/Sales ratio at 1.36 in Sept. after 1.36 in the prior month
o Auto inventory/sales ratio at 1.80 in Sept., highest since May 2009

ICBC Standard Bank Plans to Shut Base Metals, Equities Units

Bloomberg

ICBC Standard Bank, a venture between the biggest lenders in China and Africa, will close its base metals and equities
businesses because of poor performance and difficult market conditions. The changes will affect 150 jobs and will take
place in the first half of 2020, according to a statement from the London-based lender. The bank will keep other
businesses, including precious metals and energy, and the decision is subject to shareholder approval.

“We are addressing our cost base and are taking measures against a backdrop of continuing unfavorable market
conditions to ensure a position of long-term, sustainable strength,” said Chief Executive Officer Wenbin Wang. “If the
closures are approved, we will work on an orderly wind down of client positions.”

The closure comes amid a period of heightened turmoil in the raw materials industry as the trade war, slowing
economic growth and shifts in technology disrupt traditional markets. Other commodity traders have struggled in the
London New York Singapore Tokyo
(44 20) 7489.6721 (212) 878.4192 (65) 6372 8060 (813) 3285.3370
Micki Waite Craig Tuckman Cathy Xu Koji Kasaba
5
current environment. Cargill Inc. said in August that it’ll close the base-metals desk at its risk-management unit.
Goldman Sachs Group Inc., for decades Wall Street’s dominant commodities trader, also made cuts to the division
earlier this year, a person familiar with the matter told Bloomberg News in March.

ICBC Standard Bank, also known as ICBCS, is 60% owned by Industrial & Commercial Bank of China Ltd. and 40%
by Standard Bank Group Ltd. The bank suffered a $15 million loss last year after declining appetite for emerging-
market risk and reduced investment flows hit its trading business. U.S. sanctions against aluminum producer United
Co. Rusal also sparked volatility in its base-metals business.

Market conditions have continued to deteriorate for the group. Standard Bank wrote down the value of its holding in
ICBCS to $220 million at the end of September, from $383 million previously. It’s engaging with ICBC to determine
the best way forward for the business, it said in a filing last month. The base metals business includes aluminum,
cobalt, copper, nickel, lead, tin and zinc, according to its website. It also has precious metals, crude oil and refined oil
products businesses with offices in London, New York, Singapore and Shanghai.

Global Copper Smelting Activity Rose In October - Satellite Index

Reuters

Global refined copper production increased in October, mainly due to strong smelting activity in China, according to
an index based on satellite surveillance of copper plants released on Friday. Britain-based Earth-i, which specialises in
geospatial data, launched its SAVANT service last month, which tracks 100 smelters accounting for 80-90% of global
production.

It sells data to fund managers, traders and miners but also publishes a free monthly index of copper smelter activity.
This rose to an average of 89.7 in October, up 3.2 points from a month earlier. The index represents the percentage of
smelters globally that are active. "The rebound started in the latter part of September, driven by a sharp acceleration in
Chinese smelting activity towards the end of the month," a statement said.

Activity was not as strong in the second half of October due to reduced smelting in North and South America and
Asia excluding China, it added. "The sharp rebound we saw in the index at the end of September was a prescient
indicator of demand recovery in China," said Guy Wolf, global head of analytics at broker Marex Spectron, which
helped develop SAVANT. "The latest readings suggest Chinese smelting activity is currently more robust than other
regions, which might suggest optimism is beginning to grow that an end to the trade war could be in sight."

"Mitsui Bussan Commodities Ltd. is authorised and regulated by the Financial Conduct Authority in the United Kingdom to conduct designated investment
business. This is not applicable to all activities that the firm undertakes. Please see the firm's entry in the Financial Conduct Authority's Financial Services Register
for details: http://www.fca.org.uk/register/. This document constitutes a financial promotion under the Financial Conduct Authority's rules. Mitsui Bussan
Commodities (USA), Inc. acts as agent for Mitsui Bussan Commodities Ltd. in the United States and is registered as a futures commission merchant with the
National Futures Association in the United States. Mitsui Bussan Commodities (Singapore) Pte Ltd acts as agent for Mitsui Bussan Commodities Ltd in Singapore
and is licensed by International Enterprise Singapore in Singapore. The distribution of this document in jurisdictions apart from the United Kingdom, the United
States and Singapore may be prohibited or restricted by law and persons in possession of this document should inform themselves of and observe any such
prohibition or restriction. In addition, to the extent that solicitations are prohibited in jurisdictions apart from the United Kingdom, the United States and
Singapore without registration, this should be considered market commentary.
The specific needs, investment objectives or financial situation of any particular client have not been taken into consideration in the preparation of this document
and the contents do not constitute advice or a personal recommendation. It should be noted that some of the products the firm deals in may carry a risk to capital
and that the firm may profit from taking principal positions."

London New York Singapore Tokyo

(44 20) 7489.6721 (212) 878.4192 (65) 6372 8060 (813) 3285.3370
Micki Waite Craig Tuckman Cathy Xu Koji Kasaba
6