Overview
Copper prices retreated on Monday as the market expressed concerns over demand in China and increasing inventories in London Metal Exchange-registered warehouses. However, losses were limited by a weaker dollar. Trading volumes were subdued due to the Labor Day holiday in the United States.
Current Copper Price
Benchmark copper on the LME was down 0.5% at $8,457 per metric ton as of 1605 GMT. Prices reached a four-week high of $8,599 previously after a survey indicated that China’s factory activity expanded in August.
Impact of China’s Housing Market
While China’s factory activity showed growth, a slowdown in the country’s housing market is anticipated to continue putting pressure on industrial metals. The property sector is expected to have a longer-term negative impact on the industry. However, strong Chinese imports for certain metals suggest that demand is still holding up.
Inventories
The stocks of copper in LME warehouses have nearly doubled since July, currently reaching 107,425 tons, the highest level since October last year. This rise in inventories adds further concerns to the market.
US Dollar and Metals Pricing
Speculation that the US Federal Reserve is approaching the end of its monetary tightening cycle is contributing to weakness in the US currency. A weaker dollar makes dollar-priced metals more affordable for holders of other currencies.
Technical Analysis
From a technical standpoint, copper is facing resistance around $8,590, where the 200-day moving average sits. On the other hand, strong support is expected around $8,430-$8,440, between the 50-day and 100-day moving averages.
Lead Market Concerns
LME warrants and cash contracts indicate worries about the availability of lead in the market. The premium for the cash lead contract over the three-month contract is currently at $27.50 per ton, close to last week’s two-month high of $28.40. Three-month lead was down 1.2% at $2,222 per ton.
Other Metals
In other metals, aluminum decreased by 1.2% to $2,209, zinc slipped by 0.3% to $2,478, tin jumped by 1.9% to $26,305, and nickel was down 0.3% at $21,030.
Nickel Prices in Shanghai
Nickel prices on the Shanghai Futures Exchange rose to 175,740 yuan, their highest level in nearly four months, due to concerns over supplies after Indonesia postponed issuing mining quotas.
