Saturday, September 23, 2023

Copper doesn’t suit national holiday celebrations: It’s falling, weighed down by concerns about Chinese demand and inventories

Copper was supported on Monday by expectations that the global interest rate hike cycle is nearing its end, but worries about demand in China and rising inventories in London Stock Exchange warehouses weighed on the metal.

Benchmark copper on the London Metal Exchange (LME) traded flat at $8,407 a tonne (about $3.81 a pound). It has been in a narrow range over the past month.

For its part, the Chilean Copper Commission (Cochilco) reported that the red metal fell 0.67% to $3.77 per pound.

Five central banks are meeting this week, including the U.S. Federal Reserve, which would keep interest rates stable at its meeting on Wednesday, and the Bank of England.

Fears that China’s economy has not yet bottomed out were stoked by data that showed the slump in China’s real estate sector worsened in August, with steeper declines in new home prices, property investment and sales.

Copper inventories in LME-authorized warehouses have increased by more than 170% to 147,575 tonnes since mid-July.

The lack of concern about copper supply in the LME system is evident from the discount or contango of the spot contract to the three-month future at a one-month high of $55 per ton.

From a technical perspective, the copper account has solid support at around $8,395 per ton, where the 100-day moving average is located.

Industrial metals markets are watching the price of the dollar against the yuan (CNH=), which influences Chinese demand for industrial metals. A weaker U.S. currency could boost demand for dollar-denominated metals.

Nation World News Desk
Nation World News Desk
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