Copper falls on worries about Chinese demand

Copper prices fell as investors feared weaker-than-expected data from top consumer China.

China’s copper imports fell 8% in May from the previous month, as record high prices continued to destroy demand while overall export growth fell short of analysts’ forecasts.

Three-month copper on the London Metal Exchange fell 0.3 percent to $9,925 a tonne after gaining 1.7 percent in the last session of last week.

Copper in London has gained 27% of its value so far this year, having fallen from a record high of $10,747.5 hit last month, partly on optimism that a green revolution will boost demand further. from new uses, including electric vehicles.

China’s copper import demand is falling as the anchor price is high, causing low demand for copper in downstream sectors. China is currently the largest copper importer in the world.

The rising dollar shows that the number of US manufacturing orders in May 2021 increased, reflecting that the country’s economy is continuing to recover well and raising speculation that the US Federal Reserve (Fed) will soon tighten economic stimulus measures. The appreciation of the dollar makes dollar-denominated commodities such as copper more expensive for investors holding other currencies.

The price of copper is still being supported by the demand in the market which is expected to increase in the near future. Meanwhile, copper supply remains under strain as strikes are underway at major copper mines owned by BHP and Vale.

“Although China’s copper demand growth may decelerate as the country tightens financial conditions and credit growth is expected to continue,” said Soni Kumari, market analyst at ANZ Financial Group (Australia). There is a slowdown here, but global demand for copper remains high. There are a lot of uncertain factors affecting copper supply and until these issues are clear, copper prices are expected to continue to stay at a high level.” Goldman Sachs financial group (USA) also maintains that “copper metal price is just at the beginning of a new bull cycle and will reach record highs in recent years”. Goldman Sachs believes that the calmness of the copper market at the moment only reflects the temporary anxiety of investors and the sale of contracts that have been held in the past.

In April 2021, Chile’s copper production reached 461,200 tons, down 2% compared to April 2020 output. Despite lower supply from Chile, copper processing and refining (TC/RC) fees have rebounded due to higher bids from smelters as well as traders.

Copper output from the Chuquicamata, Radomiro Tomic and Ministro Hales mines reached 63,700 tons, up 4.43% year-on-year. Escondida, the largest copper mine globally, reported copper production at 85,700 tonnes in April, down 16.47% from 102,600 tonnes in April 2020.

Meanwhile, Anglo American and Glencore’s Collahuasi mine produced 57,000 tons of copper, up 5.36% from April 2020 and Anfogasta’s Los Pelambres mine produced 29,200 tons of copper, down 6.41% from 31,200 tons recorded. in the same period last year.

List of futures trading prices of some metals on the Shanghai floor

(Unit: CNY/ton)

Source: VITIC/Reuters

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