Strong losses had the price of copper this Friday, because China continues to leave investors worried in terms of its economy, with a new accumulation in inventories of the commodity and a lower-than-expected balance of general imports, while new uncertainty about interest rates emerged in the United States.
Copper futures fell 4.16% to US$4.48 per pound on the Comex Mercantile Exchange, closing losses of 2.57% in a third consecutive week of decline. Broad sales of all metals, appreciation of the dollar and rise in borrowing costs marked the day this Friday.
“In part, this weakness in metals responds to concerns that Chinese demand for industrial metals will not be as high as the market had anticipated in light of the energy transition, which comes with a rise in copper stocks,” wrote City Index market analyst Fawad Razaqzada.
This week, 15,269 tons more copper accumulated in Shanghai inventories, bringing the total figure to 336,964 tons, a maximum since April 2020.
Razaqzada maintained that “if stocks do not begin to decline soon and rapidly, concern will increase and prices could be affected more significantly, given that global sentiment on copper has been very bullish.”
Chinese imports
Also this Friday, China surprised with a trade surplus of US$82.62 billion in May, due to the fact that Exports rose 7.6% year-on-year (compared to 5.7% in the Bloomberg survey), and imports rose only 1.8% (when 4.3% were expected).
«Although some indicators in China inserted some optimism at the beginning of the week, foreign trade figures for May gave mixed signals, confirming the fragility of domestic demand and reinforcing the weekly decline in raw material prices, particularly copper. », noted the Santander Chile research team in its Market Vision report.
Imports of copper concentrate fell 11.6% year-on-year to 2.26 million tons, while those of raw copper rose 16% to 514 thousand tons.
Assimilating all this new information, the metal continues to reverse an increase that even led it to touch the unprecedented mark of US$5.2 per pound on May 20. Speculative funds have been unwinding long positions in the metal for two weeks, according to data as of Tuesday from the US futures regulator.
Attention to the Fed
Operators were also cautious after the May labor report in the United States, which surprised the rise in payrolls and average wages, casting doubt on the expectation of a soon rate cut by the Federal Reserve.
Occurred ad portas that next week the May CPI in the US and the rate decision of the Federal Open Market Committee (FOMC) will be known. The latter will come with an update on the US central bank’s economic outlook.
