After three months of continuous gains, metals fell this month, reversing their previous advances. Last week, copper prices declined primarily due to the stability of the US dollar, following the Federal Reserve’s indication that interest rate cuts would be postponed until the end of the year. This stabilisation of the dollar pressured copper prices downward.
A significant influx of copper into LME-registered warehouses in Taiwan and South Korea was observed, as Chinese producers took advantage of high LME prices in May to export copper. Meanwhile, Shanghai inventories reached a four-year high.
A slightly eased dollar index, high US metal equity market, and the confirmation of the EU raising tariffs on Chinese EVs from 10% to up to 38% as part of its “anti-subsidy” investigation supported price increases. However, downside risks remain as Chinese data, including PMI, credit growth, real estate investment, house prices, inflation, and commodity inventories, indicate that growth is cooling.
In the first quarter of this year, China’s economy achieved a surprising 5.3% growth rate, leading to a series of upgrades from the IMF and various investment banks. However, recent economic data has cast doubt on these optimistic projections. Key indicators, such as the manufacturing PMI (49.50) and retail sales (2.3%), have fallen short of expectations.
Internationally, the refined copper market showed a surplus of 125,000 metric tons in March, a decrease from February’s surplus of 191,000 metric tons, according to the International Copper Study Group.
Outlook:The start of the week, copper prices are expected to see small gains due to US metals equities reaching all-time highs, Chinese smelters undergoing maintenance, positive retail data, and tentative signs of strengthening Chinese demand.
Copper extended its recent decline as economic data from China highlighted continued weak spots, especially in its metals-intensive property sector. The world’s second-biggest economy released a mixed bag of figures this morning that highlighted a still-patchy recovery. Industrial output and fixed-asset investment both posted slower growth, and home prices softened further.
This week, global manufacturing PMI from various countries, US retail sales, the BoE interest rate decision, China’s loan prime rate, and Eurozone CPI data will be keenly awaited for market direction.
