Copper Price Drop: Prospects For A Rise In Chinese Demand?
Copper prices dropped on Monday as analysts reevaluated how fast and forceful demand would increase in China after the world’s largest consumer lifted COVID-19 limitations last month due to weak physical consumption.
Trading resumed following a week-long Lunar New Year break. The most actively traded March copper contract on the Shanghai Futures Exchange slid 1.2% to 69,320 yuan ($10,262.79) per tonne. At the same time, three-month on the London Metal Exchange fell 0.7% to $9,197 per tonne.
Since mid-July 2022, prices increased 28% in London and 33% in Shanghai, supported by expectations that China’s demand will pick up when the “zero-COVID” policy is no more.
However, as seen by declining premiums, physical copper demand was low. Since mid-December, LME copper saw its first weekly decline on Friday. According to Jinrui Futures, “prices have increased to a reasonably high level, and the reality may make it difficult to make a good response in the short term.”
According to Refinitiv Eikon data, zinc stockpiles decreased to 17,675 tonnes, the lowest level since at least 1998, pushing the price of cash zinc over the three-month contract by $25.25 per tonne, which was the highest level in more than three weeks.
More About Copper Price
Copper prices dropped on Monday as traders reevaluated how quickly and strongly buying would take up in top customer China.
The cost of copper has increased 11% in London and 5.5% in Shanghai so far this year. A weaker dollar and supply concerns in Peru, the world’s second-largest supplier of mined copper, also affected the copper prices.
Copper is priced in US dollars, as most other commodities are sold abroad. In the simplest terms, a decline in the value of the US dollar in relation to the currency of a commodities buyer means that less of the buyer’s own currency will be required to acquire a given amount of the commodity. Demand for the good or service increases as the price of the good or service decreases, and vice versa.
