Copper prices drop due to weak data from China

Copper prices drop due to weak data from China


The price of a tonne of copper fell to a four week low, after a series of weaker than expected Chinese data pointed to a slowdown in demand in most metals consumer world.

The copper price fell 1.7% on Friday compared to the previous day, at US $2.91 per pound. This metal, the most important in the Peruvian export basket, extended the fall started seven days ago, when it stood at US$3.13 per pound.

Three-month benchmark copper on the London Metal Exchange (LME) fell 0.8 percent to $6,748 a tonne, after previously touching its low since Aug. 18. The red metal has lost 7 percent from its highest level in September. On September 5, copper climbed 28 percent from its lowest level in May to a year high of $ 6,970 on expectations of strong demand from China and the weakness of the dollar.

Among other metals, aluminum fell 0.6 percent to 2,098 dollars a ton, zinc lost 0.6 percent to 3,005 dollars, and lead rose 0.7 percent to 2,307 dollars a ton. Unique case was the tin that gained to the closing 0.1 percent to 20,525 dollars and the nickel fell 1.4 percent to 11,200 dollars. The metal market’s trigger was data on the Chinese economy that showed lower-than-expected investment growth, as well as disappointing factory output and retail sales, although a rebound in the real estate and construction sectors could keep an Asian giant with relatively strong overall growth. Meanwhile, Chinese production of non-ferrous metals which includes copper, aluminum, lead, zinc and nickel – fell to a one-year low in August, a sign that government environmental measures are limiting the supply of basic metals.

China’s industrial output grew 6 percent a year in August, implying its lowest rise so far this year, below analysts’ forecasts. Meanwhile, copper stocks on the London Metal Exchange hit a three-week high of 246,575 tonnes on Wednesday, after European inventories posted their strongest growth in nearly nine months.

In addition to these factors, the perception that the rise in the price of copper observed in recent weeks would not only be based on fundamentals but also on speculation.

Since the beginning of this year, the price of copper has had upward trends linked to factors associated with supply disruptions, such as the halting of the production of some important mines in Chile, Indonesia and Peru, which caused a deficit on demand.

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Zac Berry is presently a full time editor at Market Morning. He covers the M&As and follows live market commentary. Before joining Markets Morning, Zac Berry worked with a start-up, where he worked in the capacity of a Team Leader tracking company events and results. Born in the U.A.E, he spent most of his growing up years in Dubai. Currently, he resides in U.S. and is pursuing his charter in Accountancy.