Copper price plummeting amidst trade confusions

Copper prices reduced even though the demand increased in China that is one of the largest consumers. Investor expects the prices to gain significantly in the coming year due to increase in demand. Steel was in high demand in China and its prices grew significantly. Experts believe the fundamentals of metal stocks are good and miners claim the demand remains strong across global regions. Another analysis at BMO Capital believes the demand will fall to 2.6 per cent in the next year.

Survey supports investment

Copper is often believed to be an indicator of global economic situation, and its prices fell by 13 per cent in the last few days. China’s imports of copper increased in the last few weeks which led to rise in price by 0.6 percentage point at London Metal Exchange to US$6,278 a tonne at the start of the month. Commodities in general are not preferred by investors but those looking for 2019 trends can trust the metal and it has been supported by a survey by the British London Metal weeks. At least 45 per cent of the respondents in the survey felt copper could be trusted for investment. Last year in the same survey, only 33 per cent of the investors supported it.

Three months trends

The metal started gaining at the start of the year but fell in June, the time when, many investors felt the prices will range from $2.98 / lb to $3.31 / lb.  It hit a four –and-a-half year high on June 7 at US$7,300 a tonne. China’s unwrought copper imports increased in September to two- and-a-half year high. The imports of anodes, refined, alloys and semi finished metal grew 24 per cent to 521,000 tonnes from 420,000 tonnes in September as compared to August. The imports gained 21.2 per cent y-o-y and peaked since March 2016.

The state owned copper producer in China, Chile’s Codelco, that is one of the leading miners, is looking to create an annual contract, which will be a three year permanent agreement.   

Impact of tariffs

China regulated imports and increased tariffs by 25 per cent on material imported from US, which was the leading supplier of the metal to the country. Copper rates are uninfluenced by trade war as most of the metals. The physical supply chains are now stressed and futures have undergone speculative selling after the announcement of the first round of tariffs in the month of June itself.  Some believe the prices would have been higher if it there was no tension between the two leading nations.

Currently, the prices are driven by the positioning of non fundamentals which has been a tight metal situation. The metals such as nickel lost recently, even though, the demand for electric vehicle has been high but the disruptions in global trade due to eco-political factors and changes in the supply demand dynamics led to confusion.  Even in current situations, many forecast a significant growth and healthy demand for the metal.  

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