On Thursday, copper prices increased due to a weaker dollar, while a lower-than-expected demand from China prevented a higher rally.
Copper futures for July delivery went up by 0.91% to $3.88 per pound on May 04’s Asian afternoon session.
The commodity rose by 1.20% from the London Metal Exchange to $8,568.00 per ton. On the other hand, the top-traded June copper contract from Shanghai Futures Exchange traded flat at $9,678.91 a ton.
Moreover, the dollar dropped against the most significant currencies. This came after the US Federal Reserve planned on pausing its sharp tightening cycle.
Meanwhile, metal prices were weighed down due to a lower-than-anticipated demand from China, a top consumer. The factory activity in the Asian country unexpectedly fell in April since poor demand affected the manufacturing sector.
Furthermore, the copper market became frustrated with the weak rebound in the economic activity in China. As a result, investors reduced their net bullish positions on the LME metal to a six-week low.
According to analysts, it will possibly remain rangebound for now since the conflict between recession and demand continues. They added that the LME contract would average $8,840.00 a ton in the third quarter. It is 4.00% higher than the closing price on Tuesday.
Codelco Copper Production Drops
The biggest supplier of metal from Chile, Codelco, said that its first-quarter copper production and sales slumped. It needs to work on recovering from a dip in quality and setbacks in its mines.
Its output hit near its lowest level in the quarter of a century. Also, it highlights the copper industry’s challenge in maintaining output while new deposits are now more expensive to develop.
Therefore, the producer is working with four top mining overhauls. It is an effort to recover output by the decade’s end. However, logistical challenges make it difficult to do across the industry. In addition, the pandemic and the war between Russia and Ukraine contributed to the problem.
