Poor Chinese demand influences copper price

The current demand for copper, which is primarily utilized in cables and construction, is the first factor that affects copper prices. When these sectors are robust, both the price and demand for the copper rise. The second factor is copper supply. For instance, if copper is produced at a high rate but the supply is low, the price will rise; if the supply is adequate but the rate of production is average, the price would fall. Domestic and international marketplaces make up the third factor. For instance, we can imagine a scenario in which one industry is more active than others, causing prices to rise globally but decrease in that location.

On many commodity exchanges across the world, including the London – LME, the New York – Comex, and the Shanghai – SME, copper prices are negotiated between buyers and sellers. While the market is open, prices are constantly fluctuating. Spot (today’s price) and futures (contracts for a fixed price in a future month) copper prices are quoted and traded.

Concerns over demand from the top consumer led to a drop in copper prices on Monday. The expectation that U.S. interest rates will peak at a lower level than anticipated provided support, but China continued to dominate the mood. On the London Metal Exchange, benchmark copper (CMCU3) was down 0.5% at $7,595 per tonne. Prices for copper and aluminum have fallen recently as a result of China’s struggling real estate and manufacturing sectors, which account for a sizable percentage of the demand for industrial metals.

More about Metals: Copper price

The fluctuation in the value of the currency used to price commodities typically affects a portion of their price. Since March 2020, the US Dollar (market symbol: DXY) has lost 10% of its value. Hence, one would anticipate that commodity prices would rise by around 10% in response. Producers don’t care whether the value of your currency has decreased since they want the selling price in their currency to be consistent, which necessitates a rise in the price in your currency.

The demand for metals hasn’t actually benefited much from the Chinese stimulus. Although the Federal Reserve in the United States is expected to dramatically increase. Interest rates in the upcoming months to curb inflation. Growing unemployment has traders betting that borrowing costs may not wind up being as high as initially anticipated. This would be advantageous for demand and growth in general. The dollar might also be limited, making things priced in dollars more alluring to customers using other currencies.

Metals have been severely hampered by the dollar. For many months, there has been a theme of low stock availability in warehouses registered with the LME. It has led to a premium for cash metal versus three-month contracts for copper. Aluminum output in Europe is slowing down by rising energy costs. They have reached record highs since Russia invaded Ukraine in February.

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