Copper prices remained flat on Friday and ended slightly higher. The US dollar traded slightly negative which supported the metals prices. However, China’s economic growth missing expectations and normal policy support since the third and July meetings of the Politburo, limited the gains.
China’s copper demand growth has slowed to 1.2% from 2.9% for 2024, largely due to lower estimates for grid-related copper demand, and lower of changes in copper demand related to production and direct use waste. With the exception of China, global demand growth slowed after the disappointing US news. The upgrade has pushed crude demand and output into balance earlier than expected, and the market will remain in balance in 2025 and 2026.
Adding to this, China is virtually tied with India as the world’s most populous country but has the second-leading global economy. China is also the world’s leading commodity consumer, consuming over half the world’s refined copper. Therefore, the Chinese economy is a critical factor in global copper demand and prices.
Chinese economic growth has slowed over the past years. Copper’s strength and rise to a record high in May 2024 signifies copper’s underlying strength. Copper is a crucial input in infrastructure building. However, addressing climate change has opened a new demand vertical, as copper is an ingredient in EVs, wind turbines, and other green energy initiatives.
Many analysts believe copper is the new crude oil, leading to a struggle for global supplies to pace with rising demand over the coming years. New mine production requires a higher price to sustain projects. If the Chinese economy recovers, copper demand could suddenly soar, leading to even higher prices over the coming months and years.
Meanwhile, copper inventories reflect Chinese economic malaise. The London Metals Exchange is the leading copper trading arena
Technical Outlook of Copper Prices
Copper prices continued to decline for a fifth consecutive week, with prices falling to a low of 765.70, near April levels, and 776, compared to last week’s close. of 795.10.
Since May 20, 2024, prices have turned negative, falling from a high of 945.90 to a low of 765.70, a decrease of 19%. Currently, prices are trading around 760.00 for several weeks. A break below 760.00 will extend the decline near 748.50-742.00.
However, after a major decline, prices will consolidate between the 768-775-785.00 levels. Therefore, prices may have to wait for a while until multi-week support reaches 760
Happy Trading!
Commodity Samachar
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