Copper prices took a hit on Tuesday, dropping 0.2% to $9,642 a metric ton on the LME, as a stronger dollar led to selling pressure. The metal has fallen 13% since reaching record highs above $11,100 in May, with weakening demand from China and rising inventories contributing to the negative sentiment.
With concerns over China’s manufacturing sector and lackluster copper demand persisting, prices are forecasted to remain within the range of $9,500-$9,900 until new economic data is released from China. The country’s stimulus efforts have not been sufficient to stimulate growth, and the property market continues to show little signs of improvement, dragging down copper prices.
Inventories in LME-approved warehouses have surged to a six-month high of 172,850 tons, with a significant portion of the metal originating from China. This surplus has widened the discount for cash copper over the three-month contract to nearly $150 a ton, indicating an oversupply in the market.
Despite the current bearish sentiment, analysts are optimistic about future copper prices due to expected shortages. Long-term fundamentals, such as increasing demand from electric vehicles, infrastructure projects, and data centers, suggest that copper prices may reach record highs in the future.
In the broader metals market, aluminum edged lower, zinc gained, lead slipped, tin rose slightly, and nickel retreated on Tuesday. Traders will be closely monitoring developments in China and global demand trends to gauge the future direction of copper prices.
