Amidst growing concerns about Chinese demand and economic factors, metal rates today witnessed a significant dip in copper prices on Monday, nearing a four-month low experienced just last week.
The primary factors affecting market sentiment were the slowdown in China’s demand, the surge in copper stocks, and the impact of a stronger dollar.
On the London Metal Exchange (LME), the standard copper, benchmark copper (CMCU3), witnessed a 1% decline, reaching $8,140 per metric ton by 0958 GMT, showcasing the latest metal rate today.
This metal, vital in power and construction sectors, saw its price touch $8,110, closely approaching the lowest point since May end, at $8,071, recorded last week.
Future Outlook: Predicting the Trajectory of Copper Prices Amid Uncertainty
Throughout the year, industrial metal prices have been facing pressure due to dwindling demand in China. Especially in its property and manufacturing sectors. Analyst Carsten Menke from Julius Baer highlighted China’s cautious approach toward major infrastructure projects and emphasized the diminishing need for apartments due to a declining population.
This week, insights into China’s demand dynamics are expected from surveys conducted among purchasing managers in the country’s manufacturing sector, impacting the metal rate today. A significant indicator of the subdued demand lies in the copper inventories within LME-registered warehouses. Witnessing a drastic surge of over 200% since mid-July, totaling 163,900 tons.
Projections indicate an influx of more copper into the LME system. Resulting in a substantial discount for cash copper compared to the three-month contract, impacting the metal rate today and hitting a 31-year high at approximately $70 per ton.
Carsten Menke maintains a positive outlook on copper’s future, driven by the global transition toward cleaner energy. Which will escalate the demand for copper in wiring.
The strengthening U.S. dollar, however, has put pressure on industrial metals by making dollar-priced metals more expensive for holders of other currencies. Potentially dampening their demand.