Copper prices in London were close to their lowest levels since March on Tuesday, influenced by a weak consumption outlook due to concerns over a potential U.S. recession. However, tight mine supply and the potential demand growth from energy transition sectors helped to mitigate losses. The three-month copper contract on the London Metal Exchange (LME) fell by 0.8% to $8,817 per metric ton as of 0531 GMT, hovering near a 4-1/2-month low of $8,714 reached on Monday, marking a 21% decline from its record high in May.
The most-traded September copper contract on the Shanghai Futures Exchange (SHFE) saw a significant drop, falling as much as 3.3% to 70,630 yuan ($9,880.53), its lowest since March 13. Meanwhile, on the COMEX, fund managers cut their net long positions for copper to 9,449 contracts by July 30, an 87% decrease from May 21. U.S. job growth data missed expectations and the unemployment rate increased, suggesting a higher susceptibility to recession and raising hopes for a Federal Reserve rate cut.
Despite these challenges, analyst Soni Kumari of ANZ remains optimistic, stating, "We still see a soft landing and the imminent Fed rate cut will be supportive for metal prices to stabilise." Kumari also noted that challenges in copper mine supply are likely to keep the concentrate market tight, potentially reducing the output of refined copper, especially in China. "Energy transition will likely provide cushioning for any economic meltdown to metals such as copper and aluminium," she added.
The premium to import copper into China reached $48 a ton on Monday, the highest since March 18, indicating a boost in import demand from China. Other metals on the LME also saw movements, with aluminium easing 0.3% to $2,244 a ton, nickel edging down 0.4% at $16,210, zinc dipping 0.7% to $2,614, while tin remained flat at $29,485 and lead was nearly unchanged at $1,932 after a 4.6% tumble in the previous session. The SHFE saw similar trends, with aluminium falling 1% to 18,790 yuan a ton, nickel dropping 1.3% to 128,700 yuan, zinc declining 2% to 22,080 yuan, lead shedding 4% to 17,155 yuan, and tin decreasing 2.2% to 242,250 yuan.