Introduction
Prices of copper traded within a tight range on Monday, as investors weighed demand uncertainty and higher supplies against support from a weaker U. S. dollar. Three-month copper on the London Metal Exchange little moved at $8,171 per metric ton by 0144 GMT, after recording a weekly gain on Friday. The most-traded December copper contract on the Shanghai Futures Exchange lost 0.4% to 67,380 yuan ($9,245.08) per ton.
Factors Influencing Copper Prices
The metal used in power, transportation, and construction sectors is facing slower seasonal consumption in the winter, while a patchy economic recovery in China also added uncertainty to its demand outlook. This uncertainty is being further compounded by the rise in copper stocks on SHFE warehouses, which saw an 11.3% increase last Friday, although they remain at a one-year low level. The dollar index is hovering around its six-week low, as U. S. job data released last Friday reinforced investors’ expectation for the Federal Reserve to hold interest rates steady again at its December meeting.
Other Metals Performance
While copper prices remained stable, other metals experienced slight fluctuations. LME aluminium eased 0.2% at $2,250.50 a ton, tin dipped 0.3% to $24,285, zinc shed 0.4% to $2,514, lead nudged down 0.2% to $2,166.50, and nickel fell 0.9% to $18,060. On the SHFE, aluminium nudged 0.2% lower to 19,150 yuan a ton, zinc slid 0.2% to 21,380 yuan, lead added 0.4% to 16,615 yuan, nickel was up 0.4% to 142,680 yuan, and tin ticked 0.5% up to 207,160 yuan.
Conclusion
The current stability in copper prices is a result of the balancing act between demand uncertainty and higher supplies, with support from a weaker U. S. dollar. The uncertain demand outlook for copper is primarily a result of slower seasonal consumption in the winter and a patchy economic recovery in China. However, the rise in copper stocks on SHFE warehouses adds further complexity to the situation. In the broader metal market, other metals experienced minor fluctuations. Investors continue to monitor the dollar index and the upcoming Federal Reserve meeting for guidance on future interest rate changes.
