On Wednesday, copper prices tumbled as China’s economy weakened amid rising Covid infections and a decline in industrial production.
The copper futures for March delivery fell by 0.18% to $4.22 per pound in the Asian afternoon session.
Industrial production contracted by 1.30%, surpassing the analysts’ expectation of 0.80%. The latest report worsened from the 2.20% growth in the previous month. Also, this was the weakest growth since May, amid rising Covid-19 cases and a downturn in the property sector. Besides, the manufacturing and mining sectors’ output eased amid a rebound in utilities.
Meanwhile, Chinese metal utilization is weak and likely to remain so as the country heads into the Lunar New Year.
Moreover, Beijing’s copper import premiums are falling, and the Shanghai exchange inventories are rising.
Furthermore, analysts stated that Asian and European shares dropped, making dollar-priced red metal expensive in China.
This month, copper surged by 9.00% after the loosened Covid policy. This raised expectations that demand could revive this year.
Besides, economists stated that open interest in industrial metals increased to $18.00 billion last week. This is the largest weekly rise since Russia invaded Ukraine.
Additionally, speculators flooded the market, swelling their net long position in COMEX copper futures to its largest since April.
Chinese Economy Weakened While Copper Futures Drop
On Tuesday, China’s annual gross domestic product (GDP) decelerated by 2.90%, beating the expert’s estimate of 1.80%. The recent data weakened from the previous 3.90% growth.
Additionally, industrial output grew the least in the seven months in December, while retail sales remained weak. Also, the jobless rate dropped from November’s six-month high.
In 2022, China’s economy expanded by 3.00%, missing the official target of 5.50%. This marked the second-slowest pace since 1976.
Furthermore, the quarterly GDP report slowed by 0.00%, surpassing the market’s forecast of -0.80%. The recent data failed to beat the third quarter’s 3.90% progress.
Moreover, the latest result underlined Beijing’s sudden economic reopening in December following protests against the strict Covid policy. Meanwhile, authorities aim to stabilize the country’s domestic consumption and business activity.