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Copper Prices Fall Amid Inventory Build and Chinese Interest Rate Hike Worries

Strategic Insights

— 1 min read

Copper prices slid on Wednesday as market participants weighed the impact of China's interest rate hike announcement on demand for the metal. The most-actively traded copper contract, for March delivery, declined 5 cents, or 1%, to settle at $4.5240 a pound on the Comex division of the New York Mercantile Exchange. The Chinese interest rate hike, coupled with a build in exchange-listed warehouses, has sparked concerns about the economic effects on copper demand.

Key Takeaways:

  • Copper futures fell 5 cents, or 1%, to settle at $4.5240 a pound on the Comex division of the New York Mercantile Exchange.
  • China's interest rate hike, a 25-basis-point increase in benchmark lending and deposit rates, has raised concerns about crimping demand for copper by slowing the economy.
  • The Asian nation consumes around 40% of the world's annual copper production as it rapidly urbanizes.
  • London Metal Exchange data showed a build of 4,375 metric tons of copper in exchange-listed warehouses, to 396,400.
  • MF Global analyst Edward Meir noted that stocks were up sharply overnight, and in conjunction with the Chinese rate announcement, prices may be in store for sloppy trading over the next day or two.
  • Market analyst Sterling Smith at Country Hedging stated that copper may have room to fall as participants cash in on record highs set last week, and the market may be vulnerable to profit-taking.

Statistics:

  • Copper futures declined 1% to settle at $4.5240 a pound on the Comex division of the New York Mercantile Exchange.
  • China's interest rate hike was a 25-basis-point increase in benchmark lending and deposit rates.
  • The build in exchange-listed warehouses was 4,375 metric tons.

Sources:

  • Dow Jones Commodities News via Comtex - "Copper futures fell Wednesday as an inventory build and continued worries about a Chinese interest rate hike weighed on the market."
  • Sterling Smith, market analyst at Country Hedging - "The fallout from the Chinese [rate hike] is probably pressuring the market right now."
  • Edward Meir, MF Global analyst - "Stocks were up sharply overnight, and along with yesterday's Chinese rate announcement, prices may be in store for somewhat sloppy trading over the next day or two."

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