Signs of quick global recovery supports copper and iron ore prices

Copper Price Falls to $9,655, Lowest in Two Months

Key Points:

  • Copper hits a two-month low at $9,655 per ton due to weakening demand in China.
  • Soft economic data from China pressures copper prices, reflecting global commodity market impacts.
  • Copper peaked above $11,000 per ton but rapidly declined due to market volatility and economic concerns.

Copper’s price has experienced a notable decline, hitting its lowest level in two months. This decrease is largely attributed to weakening demand in China, a crucial market for the metal. Copper costs $9,655 per ton, marking a 0.9% drop over the past two months. The London Metal Exchange reports this as the lowest price in eight weeks, reflecting a significant shift in the market dynamics.

China’s Weak Data Lowers Copper Price to $9,655.

The soft economic data emerging from China has exerted considerable downward pressure on copper prices. This data has directly contributed to the metal’s fall to $9,655 per ton. As the second-largest economy in the world, China’s economic performance profoundly impacts global commodity markets, including copper.

Copper Prices Fall Due to China’s Industrial Slump

China’s industrial output has slowed, significantly impacting the copper market. The housing and construction sectors, vital components of the country’s economy, are experiencing a slump. With a population of 1.4 billion people, the slowdown in these sectors has had a ripple effect, contributing to the drop in copper prices. The reduced industrial activity has lessened demand for copper, further driving down its value.

China’s Stimulus Efforts Fail to Halt Decline

Chinese President Xi Jinping’s government has introduced measures to stabilise growth and the property sector in response to the economic downturn. These measures include renewed calls for more robust government stimulus. However, despite these efforts, declines in real estate investment and home prices across China worsened in May, exacerbating the challenges faced by the copper market.

Copper Down from $11,000 US Peak to $9,655.

In contrast to the current trend, copper reached a record high above $11,000 per ton in May. This peak was followed by a rapid cooling of prices, driven by concerns over rising global inventory levels and persistent weakness in the Chinese market. The swift decline from this record high underscores the volatility and sensitivity of the copper market to economic fluctuations.

Fed’s Rate Stance Pressures Metals

Metal prices worldwide, including copper, have come under additional pressure due to the US Federal Reserve’s revised outlook on interest rate cuts this year. This shift in monetary policy has affected copper and other metals like iron ore and aluminium. Iron ore prices have fallen 2.3% in the last week, while aluminium has reached its lowest since mid-April. The broader impact of the Federal Reserve’s policies highlights the interconnected nature of global metal markets and the influential role of major economic powers.

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