Earlier this week, the price of copper fell to its lowest in more than three months. The significant drop in price was driven by demand concerns after China failed to issue fresh stimulus measures despite the struggling economy.
Daniel Ghali, a senior commodity strategist at TDS, notes that the continued rise in copper exports from China supports TDS’s view of a weakness in domestic demand. He noted that the decline in demand expectations for the commodity suggest a rise in downside convexity. It is expected that policymakers will announce economic policies to promote domestic demand at the end of the month during the Politburo meeting.
On the London Metal Exchange, three-month copper hit $9,257.50 per metric ton before going lower to $9,233.50. SCF, the most traded September copper contract on the Shanghai Futures Exchange, also dropped to $10,416.10 per ton. The recent drop in price has boosted physical buying of the red metal in China. CRU Group’s He Tianyu noted that despite this, purchases weren’t strong with people still expecting that prices on the Shanghai Futures Exchange would drop to 75,000 yuan ($10,309) or lower.
Meanwhile, inventory for copper in London Metal Exchange warehouses recorded a new high while bonded warehouse stockpiles in China rose to a new high. Stocks on the Shanghai Future Exchange also dropped recently but still maintained their high.
In comparison to 2023 data, refined copper exports in China for the month of June rose by roughly seven times. The premium to import the red metal into China also increased to $9 per ton, its highest value since April. This signifies an improvement in demand, although its still low in comparison to prior values.
The price of aluminum’s most traded contract on the London Metal Exchange, CMAL also dropped to $2,334 per ton. On the same exchange, the price of zinc hit 23.430 yuan, representing a 0.2% drop. The price of tin also reached 254.950 yuan, which represents a 2.6% drop. Lead and nickel also saw dips in their prices, falling to 19.125 yuan and 128.610 yuan respectively.
In other news, China saw its imports of coal, soybeans and iron ore increase in June while imports of rare earths and crude oil dropped. One rare earths analyst posited that the drop in exports was expected after overseas buyers increased procurement for the previous quarter.
Currently, China is the largest importer of crude oil as well as the biggest buyer of soybeans, iron ore and coal.
The broader outlook for copper is generally bullish, so entities such as Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are unlikely to be rattled by these short-term fluctuations in the market for this metal.
NOTE TO INVESTORS: The latest news and updates relating to Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are available in the company’s newsroom at https://ibn.fm/AZMCF
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