“The current pandemic situation is still severe and complex, and the negative impact of Covid controls on the economy is still pronounced,” said Wang Zhe, senior economist at Caixin Insight Group. The Caixin Manufacturing Purchasing Managers’ Index (PMI) for China slipped to 48.1 in September, down from 49.5 in August, 50.4 in July and 51.7 in June, indicating that Covid-19 containment measures have disrupted supply and demand and restricted national travel, weighing heavily on the index. The Fed raised rates by another 75 basis points in September, for the third consecutive month. The London Metal Exchange ( LME) Index recorded its sharpest quarterly drop since the 2008 global financial crisis during the second quarter.Īggressive interest rate rises by central banks, including the US Federal Reserve ( Fed), to tackle 40-year high inflation have increased concerns among traders that the global economy could be facing a hard landing. However, copper prices have retreated by about 25% from their March highs. What’s more, while demand has climbed, output from copper mines has not kept pace, tightening the supply balance. The pandemic also saw a boom in demand for manufactured goods, including electronics and household appliances, as consumers turned to home entertainment and home improvement during lockdowns. Higher crude oil and gas prices are raising operational costs for copper producers, but also accelerating the energy transition and in turn increasing copper demand. The transition to clean energy requires larger quantities of copper for wiring in electric vehicles (EVs) and solar panels. In addition to the recovery in demand after the pandemic, there are several long-term demand trends that have been supportive to copper The COMEX copper price chart shows that the metal climbed by 130% from the March 2020 low at the start of Covid-19 lockdowns to trade up to $5 a pound in early March 2022. On rising demand and tightening supply, prices for copper – as well as aluminium, tin and zinc – reached record highs in March. Manufacturing plants in Changchun suspended operations and construction work was halted in Shanghai, reducing consumption in the world’s largest copper market.Īt the end of February, traders weighed the impact of the Russia-Ukraine conflict on commodities and stockpiled industrial metals. The price trend of copper was choppy at the start of the year as pandemic-related lockdowns across several regions in China raised concerns about a slowdown in economic growth just as industrial production had ramped up following the Lunar New Year holiday.
COPPER SCRAP PRICE DRIVERS
In this article, we look at the drivers for the recent market volatility, and examine some copper price predictions from a few analysts.
Is the current price a buying opportunity, or would a short position on copper be more profitable? US30 US Wall Street 30 (USA 30, Dow Jones)
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