Copper prices experienced a decline on Tuesday, influenced by the strengthening of the U.S. dollar and a surge in inventories. However, China’s positive economic indicators provided some support.
In the recent overnight trading session, copper prices on the London Metal Exchange (LME) commenced at $8395.5 per metric ton and concluded at $8392.5 per metric ton, marking a marginal decrease of 0.11%. The price range for the day stretched from $8351 per metric ton to $8400 per metric ton.
Factors Behind the Decline in Copper Prices
Sudakshina Unnikrishnan, an analyst from Standard Chartered. Noted that copper prices struggled to stay above the $8,400 mark due to the ongoing increase in inventories, reaching levels last witnessed in October 2022.
Adding to the mix, the European Central Bank has revised its inflation projection for 2024, exceeding 3%, up from the forecast of 3% made in June. This suggests the possibility of an interest rate hike.
Simultaneously, the U.S. dollar displayed strength as investors eagerly awaited U.S. inflation data. Which holds sway over the Federal Reserve’s decisions concerning interest rates. A robust dollar tends to reduce the attractiveness of metals priced in dollars for buyers utilizing other currencies.
On a more optimistic note for the copper market, China’s property sector displayed signs of stability. As developer Country Garden secured approval from creditors to extend the repayment period for six onshore bonds by three years.
Copper’s substantial usage in the power and construction industries is anticipated to benefit from this development.