Copper Prices Retreat Amid Fears of Economic Slowdown

Strategic Insights -

Concerns over the US economy and China's property sector contributed to a decline in copper prices, with the most actively traded copper contract for September delivery dropping 5.1 cents, or 1.5%, to $3.3535 a pound on the Comex division of the New York Mercantile Exchange. The unexpected rise in US jobless claims and jitters about China's banking and property sectors weighed on investors' sentiment, leading to a pullback in prices.

Key Takeaways:

  • Copper prices declined 5.1 cents, or 1.5%, to $3.3535 a pound on the Comex division of the New York Mercantile Exchange, the most actively traded copper contract for September delivery.
  • The unexpected rise in US jobless claims, climbing by 19,000 to 479,000 in the week ended July 31, contributed to the decline.
  • China's property sector concerns, including a 50% decline in housing prices in cities with sharp gains, added to the negativity around copper prices.
  • Traders were cautious ahead of the Friday non-farm payrolls report, expected to show a drop of 60,000 jobs and an unemployment rate of 9.6%.
  • Copper prices are sensitive to economic data due to its widespread use in manufacturing and construction.
  • Inventories of copper stored in London Metal Exchange warehouses fell 875 metric tons on Thursday, with 413,075 metric tons remaining.
  • Experts warn that copper prices may be "top-heavy" at around $3.40 a pound, making it challenging to see big demand.

Statistics:

  • Copper prices declined by 5.1 cents, or 1.5%, to $3.3535 a pound.
  • US jobless claims rose by 19,000 to 479,000 in the week ended July 31.
  • China's banking regulator ordered lenders to conduct stress tests that gauge the impact of a 50% decline in housing prices in cities with sharp gains.
  • Copper prices are sensitive to economic data, with experts warning that prices may be "top-heavy" at around $3.40 a pound.
  • Inventories of copper stored in London Metal Exchange warehouses fell 875 metric tons on Thursday.

Sources:

  • Dow Jones Commodities News via Comtex, "Copper Prices Retreat Amid Fears of Economic Slowdown"
  • Standard Bank analyst Leon Westgate
  • ApexFutures.com Vice President Craig Ross
  • Lind-Waldock Senior Market Strategist Bob Haberkorn
  • IG Markets Senior Market Analyst Dan Cook