Copper Prices Remain Steady Amid China's Interest Rate Hike

Strategic Insights -

Copper prices remained near steady on Monday, following a Christmas Day interest rate hike in China, as the weaker dollar helped balance the move. The Comex copper futures contract for March delivery was recently down 0.1% at $4.2545 a pound, while the thinly-traded December-delivery copper futures was up 0.4% at $4.2685. The Chinese interest rate hike was expected, but some market participants worry that it may cool the economy and reduce copper demand.

Key Takeaways:

  • Copper prices kept near steady on Monday as a Christmas Day interest rate hike in China was balanced by a weaker dollar.
  • The Comex copper futures contract for March delivery was recently down 0.1% at $4.2545 a pound.
  • The thinly-traded December-delivery copper futures was recently up 0.4% at $4.2685.
  • China, the world's largest copper consumer, has implemented several tightening measures to curb inflation in recent months.
  • Market participants worry that China's interest rate hike will cool the economy and reduce copper demand.
  • The weaker dollar gave copper prices a boost, helping balance the Chinese news.
  • Charles Nedoss, senior market strategist with Olympus Futures, predicted that China will raise interest rates two more times in the next few months.

Statistics:

  • Copper prices moved lower by 0.1% or $0.004 to $4.2545 a pound.
  • The Comex copper futures contract for March delivery set a fresh all-time record high of $4.2985 a pound overnight in electronic trading.
  • China raised benchmark interest rates by 25 basis points on Christmas Day.
  • The euro was recently at $1.3145, up from $1.3117 late Thursday.
  • China is two percentage points below where they were before the financial crisis.

Sources:

  • Dow Jones Commodities News (via Comtex)
  • Comex division of the New York Mercantile Exchange
  • Olympus Futures
  • Dow Jones Newswires
  • Tatyana Shumsky, tatyana.shumsky@dowjones.com