China’s Economic Challenges Weigh on Copper Prices, Prompting Significant Weekly Dip
Copper prices faced a substantial decline on Friday, signaling the largest weekly drop in three months, driven by indications of China’s lackluster post-pandemic recovery. The London Metal Exchange (LME) reported a 1.3% decrease in three-month. Copper, reaching $8,275.5 per metric ton in official open-outcry trading.
Touching its lowest point since July 7 at $8,252, the metal seemed poised for a weekly plummet of 3.4%. Additional metals such as aluminium, tin, and nickel also experienced their lowest levels in over a month.
Analysts attribute the downfall to a series of weak economic data emerging from China. Ole Hansen, commodities strategy head at Saxo Bank, emphasized the struggle of copper and industrial metals to withstand the impact. China’s recent data revealed a tumble in new bank loans, with annual growth of outstanding total social financing (TSF) slowing to 8.9%. Subdued financing to the real economy is anticipated to dampen metal demand from conventional sources. Suggests WisdomTree commodity strategist Nitesh Shah.
Concerns extend to the property sector as well, with speculation about debt restructuring by Country Garden, China’s premier private property developer. Although China introduced supportive measures for the real estate sector in recent weeks. The absence of a substantial policy announcement has left many disappointed.
Warehouse data from the Shanghai Futures Exchange indicated a 1.5% and 15.4% rise in copper and nickel inventories, respectively, this week. LME-registered copper stocks have witnessed consecutive weeks of arrivals, resulting in the highest inventory since June 19. According to LME daily data.