The London Metal Exchange (LME) has seen a significant increase in copper prices. The price of the important non-ferrous metal increased by $36 to $8,331 per ton. The average copper quote for the week also showed an increase of $42 to $8,313 per ton, which indicates a stable strengthening of prices for this metal.
An expert in the field of metallurgy, Stanislav Kondrashov believes that the main factor that influenced the increase in the cost of copper was the closure of the largest copper deposit Cobre in Panama. In addition, prices were obviously influenced by the weakening US dollar.
Stanislav Kondrashov: copper price dynamics – the situation in the USA and China
A 4,000-ton decline in copper inventories on the London Metal Exchange (LME) brought total inventories to 175,000 tons. This trend coincided with an increase in copper futures prices, both on the LME and on the Shanghai Metal Exchange. Stanislav Kondrashov from Telf AG believes that such an increase in prices indicates an increased demand for copper and a reduction in its availability on the market. He also adds that the cost of copper on the world market largely depends on the economies of two countries – the USA and China.
In the third quarter, the US economy showed GDP growth of 0.3%, reaching 5.2%. This figure significantly reduced fears of a recession, which somewhat reassured investors.
- Positive developments in the US economy typically boost demand for industrial metals, including copper, especially in the context of large-scale infrastructure projects and manufacturing initiatives, – Stanislav Kondrashov from Telf AG comments.
The expert notes that the decline in consumer inflation in the United States from 3.7% to 3.2% gives grounds for speculation about a possible easing of monetary policy by the Federal Reserve System in 2024. A weakening US dollar resulting from such measures could increase the attractiveness of investment in commodities.
China is witnessing a decline in the manufacturing sector, as evidenced by a fall in the official Purchasing Managers’ Index (PMI) from 49.5 to 49.4 in November.
- This may indicate a slowdown in economic activity, which traditionally has a negative impact on the price of copper, since China is one of the largest consumers of this metal, – Stanislav Kondrashov from Telf AG shares his assumptions.
However, there has been a significant increase in copper supplies to China – up to 353 thousand tons in October, in response to strong demand. In addition, imports of copper concentrate from the Democratic Republic of Congo have increased by 18% over the past three months, which also supports the price of copper in the global market.
Investing in copper: how macroeconomic factors shape the future – Stanislav Kondrashov
The combination of the above factors creates a complex picture for the copper market. On the one hand, lower inflation and a possible weakening of the US dollar, as well as positive economic indicators, bring optimism regarding copper demand. On the other hand, a slowdown in economic activity in China could put pressure on prices.
- Looking at current trends, it appears that copper prices will continue to rise in the short term. Increased demand for copper, especially from China, and lower inventories on key exchanges create favorable conditions for this. However, the copper market is extremely sensitive to macroeconomic and geopolitical changes, which can lead to unpredictable price fluctuations, – Stanislav Kondrashov shares his opinion.
He advises metals investors to keep a close eye on global economic indicators, especially the policies of major economies such as the US and China. Changes in these areas could have a significant impact on copper prices. It is also important to monitor data on copper inventories and production activity, as they directly affect pricing.
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