Copper price have fallen from a five-month peak as the market digests weaker demand generally and dismal Chinese manufacturing data. Even with supply staying tight, it’s clear that weak demand is driving the sentiment. Investors are also now focused on the upcoming US jobs report. They are looking for any signals on where the Fed might head next. With so much riding on these numbers, currency and industrial metals traders are watching global markets closely.
Copper Price Faces Pressure From Weakening Demand
Copper eased slightly after reaching its highest point since March, as China’s factory sector contracted again in August. Thus, that’s impacted demand from the world’s top metals consumer. The slow demand was more significant than any supply-side tightening, even though refined output decreased. This is due to the new tax laws that restricted the use of scrap.
Some support came from closed smelters and scrap rod mills. However, it wasn’t enough to keep the momentum positive. Additionally, prices softened across the board, with losses showing up on both the London and Shanghai exchanges.
The US dollar held steady, so there wasn’t any help from currency moves either. That’s got the market cautious, especially with key US data on the way. Traders are watching upcoming US labor numbers closely. Thus, if there’s any sign the jobs market is cooling, the dollar could weaken, and copper might get some relief.
Can Copper Price Rebound Before US Data Release
Copper has retreated modestly after reaching a five-month high. Additionally, Shanghai futures and London’s three-month contract both saw declines of less than 1%. It closed at $4.49 per pound on the LME after a decline of roughly 1.08%. The LME warehouse inventories have increased by 75% since late June. That raises concerns about demand, especially outside of China.
The strong US dollar is another headwind here. Global buyers are dealing with expensive copper just because of currency moves. On the bright side, there’s ongoing chatter about potential US rate cuts if economic data keeps softening. Thus, if that happens, a weaker dollar could give copper some much-needed support.
Forex traders are watching all this closely. A change in the value of the dollar could give copper a boost abroad. A rebound in global markets would also help sentiment and possibly drive some fresh interest. The whole industry is in a holding pattern, just waiting to see what’s next.
Will Supply Constraints Support Prices Soon?
Supply challenges just keep piling up, especially out of China and Chile. China’s refined copper output actually slipped, and projects in Chile like Quebrada Blanca are still stuck in indecision. These persistent problems are creating real constraints on the market.
The market’s caught between two big forces. Weak manufacturing and lackluster US data are putting pressure on prices. At the same time, if the Fed starts easing up, we could see the dollar weaken. This typically gives copper a boost. Additionally, copper prices are in contention of rising again if China, or any other major economy, manages to encourage growth.
Copper Market Trends And Forex Impact
Copper’s situation right now? It’s tricky. If US economic data underperforms and Chinese demand keeps dragging, the copper prices could take another hit. Still, limited supply out there might keep things from hitting the rocks. Additionally, if the Fed shifts to easing and the dollar weakens, we could see an increase in buying, especially from global markets.
For traders and industrial buyers, it’s smart to keep a close watch on those US jobs reports. In short, copper is balancing between weak short-term demand and longer-term supply constraints.
About The Author
