Copper price slips on uncertainty about global demand
Metal caught between bullish and bearish forces including recession fear, firmer dollar and China lifting lockdown
31 May 2022 - 18:35
byEric Onstad
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Workers move copper sheets from a warehouse in Mufulira, Zambia. File photo: GETTY IMAGES/PER-ANDERS PETTERSSON
Copper prices slipped from their highest level in more than three weeks on Tuesday, under pressure from a firm dollar and recession worries sparked by interest-rate hikes to fight inflation.
Copper was caught recently caught between bullish and bearish influences.
Prices advanced earlier on investor hopes that lifting China’s lockdown restrictions will boost demand. Three-month copper on the London Metal Exchange dropped 0.4% to $9,50250 a tonne, after earlier climbing to its highest since May 5 at $9,591.50. US Comex copper gained 0.3% to $4.32/lb.
Shanghai authorities removed lockdown fences on Tuesday, preparing to lift a two-month lockdown at midnight, while China’s cabinet announced a package of 33 stimulus measures to revive its pandemic-ravaged economy.
“The news from China is just enough to create a refocus in the market towards a possibility of a pick up in demand,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“There’s a slowdown coming, but the question is whether it will be to the extent that it will have a negative impact on global demand,” said Hansen.
A surge in oil prices fanned fear of further acceleration in global inflation that would keep the US Federal Reserve and other central banks raising interest rates.
Copper slid 18% in about two months after touching a record high of $10,845 a tonne in early March on fear of a slowdown in China and inflation disrupting economies elsewhere.
In May, LME copper was on track for its second monthly weakening with a drop of 2.5%.
But weak metals inventory levels are a sign of underlying strength in the market, said Hansen. “It’s quite telling that despite worries about growth and demand, there hasn’t been a pickup of inventory levels at a time of year when you would expect some stock build.”
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Copper price slips on uncertainty about global demand
Metal caught between bullish and bearish forces including recession fear, firmer dollar and China lifting lockdown
Copper prices slipped from their highest level in more than three weeks on Tuesday, under pressure from a firm dollar and recession worries sparked by interest-rate hikes to fight inflation.
Copper was caught recently caught between bullish and bearish influences.
Prices advanced earlier on investor hopes that lifting China’s lockdown restrictions will boost demand. Three-month copper on the London Metal Exchange dropped 0.4% to $9,50250 a tonne, after earlier climbing to its highest since May 5 at $9,591.50. US Comex copper gained 0.3% to $4.32/lb.
Shanghai authorities removed lockdown fences on Tuesday, preparing to lift a two-month lockdown at midnight, while China’s cabinet announced a package of 33 stimulus measures to revive its pandemic-ravaged economy.
“The news from China is just enough to create a refocus in the market towards a possibility of a pick up in demand,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“There’s a slowdown coming, but the question is whether it will be to the extent that it will have a negative impact on global demand,” said Hansen.
A surge in oil prices fanned fear of further acceleration in global inflation that would keep the US Federal Reserve and other central banks raising interest rates.
Copper slid 18% in about two months after touching a record high of $10,845 a tonne in early March on fear of a slowdown in China and inflation disrupting economies elsewhere.
In May, LME copper was on track for its second monthly weakening with a drop of 2.5%.
But weak metals inventory levels are a sign of underlying strength in the market, said Hansen. “It’s quite telling that despite worries about growth and demand, there hasn’t been a pickup of inventory levels at a time of year when you would expect some stock build.”
Reuters
European equities slip amid rising oil price
Oil prices extend gains after ban on Russian crude
JSE slips as investors worry about stubborn inflation
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