Copper Prices Decline for Third Straight Session Amid China Demand Concerns
Copper prices continued their downward trend on the London Metal Exchange (LME) for the third consecutive session on Tuesday, driven by persistent concerns over demand from China, the world's top consumer, and uncertainty about the timing of interest-rate cuts. The three-month copper contract fell by 0.9% to $8,948.5 per metric ton by 0959 GMT, dropping below its 200-day moving average of $8,998.
Aluminium prices also declined, falling 1.2% to $2,224.5 per ton, marking its lowest since March 6 after hitting $2,220.
On Tuesday, Chinese leaders indicated that the stimulus measures necessary to achieve this year's economic growth target would focus on consumers rather than the traditional infrastructure investments. This shift in strategy has added to the pressure on industrial metals.
Standard Chartered analyst Sudakshina Unnikrishnan noted that ample nearby metal supplies, ongoing issues in China's housing sector, lack of a significant recovery in macroeconomic data, and the absence of stimulus targeting metals-consuming industries are all contributing to the downward pressure on metal prices.
Sandeep Daga, director at Metal Intelligence Centre, warned that the sell-off in metals could intensify if Wednesday's Chinese factory activity data reveals a decline from the previous month.
Market caution also prevailed ahead of the U.S. Federal Reserve meeting, with investors not expecting a rate cut this week but having fully priced in a 25-basis-point reduction for September.
Copper prices have declined 19% since reaching a record high of $11,104.50 on May 20, driven by a rally fueled by short covering and speculative bets on a potential long-term copper shortage due to the green energy transition. Money managers' net long positions on COMEX copper dropped to 19,515 contracts on July 23, down from 75,342 contracts on May 21, according to exchange data.
Despite the current bearish sentiment, miners remain optimistic about copper's long-term prospects. Global mining giants BHP Group and Lundin Mining recently announced a $3.25 billion acquisition of Filo Corp, which is developing a copper deposit in Latin America and has yet to commence production.
Other metals also experienced declines, with zinc down 0.3% at $2,629, lead down 1.0% at $2,046.5, and tin dropping 1.9% to $28,745. However, nickel prices rose by 0.6% to $15,935.
