Market Sees Uptick in Copper Prices Despite Europe’s Economic Challenges
Copper prices displayed resilience on Tuesday, with both the London Metal Exchange (LME) copper and SHFE 2312 copper contracts recording gains during their respective overnight sessions. The LME copper closed with a notable increase of 0.96%, reaching $8,247 per metric ton, while the SHFE 2312 copper contract marked a 0.36% rise to 67,690 yuan per metric ton. This positive trend persisted despite the backdrop of a contracting European economy, evident in the October Eurozone services PMI and composite PMI figures, which stood at 47.8 and 46.5, respectively.
In conjunction with the surge in copper prices, there was a noteworthy reduction in China’s copper stocks, with a decline of 3,500 metric tons reported from Friday to Monday, November 6, bringing the total to 60,200 metric tons. This figure starkly contrasts with last year’s amount of 102,200 metric tons. The decrease in stocks was accompanied by a reduction in the volume of imported copper in East China and domestic copper arrivals. However, local inventories in South China saw an increase, driven by Guangdong’s high premium and a dip in downstream purchasing enthusiasm.
A survey conducted by the Federal Reserve indicated that credit conditions in the United States continued to tighten in the third quarter. However, this tightening occurred at a slower pace, with a decline in loan demand. This development could potentially influence the Federal Reserve’s decision on interest rates at their forthcoming December meeting.
On the previous day, copper prices remained relatively stable, influenced by several factors, including a seasonal slowdown in consumption, increased supplies, and a weakened US dollar. The three-month copper on the LME was valued at $8,171 per metric ton, while the December copper contract, the most actively traded on the Shanghai Futures Exchange (SHFE), experienced a 0.4% decline, closing at 67,380 yuan ($9,245.08) per ton.
Notably, despite these price fluctuations, the price differential between copper cathode and scrap expanded in tandem with the rebounding copper prices. This suggests the possibility of a decrease in demand for copper cathode, reflecting the prevailing cautious sentiment in the market.
