Copper’s weakness on June 10
Weakness in copper prices was seen on Friday, June 10, as it consolidated broadly between the price levels of $2.02–$2.04 per pound. At 1:56 PM EDT, the COMEX copper contract for July delivery was trading at $2.03 per pound, a drop of 0.44%.
Although the stronger dollar weighs on copper prices, the increase in the inventory levels in the London Metal Exchange (or LME) gave support to prices on Friday. Although copper weighed on miners, the global sell-off pulled the prices much lower on Friday.
LME copper inventories spiked this week
The copper inventories in the London Metal Exchange surged as high as 37% this week and kept the pressure on copper prices. The huge shift of copper stocks from the Shanghai inventories to the LME inventories occurred all week.
After increasing for six consecutive days, the copper inventories in LME declined on Friday by about 1.2% and reached 210,675 tons, the highest inventory level since February 2016. The 57,000 increase in the warehouse levels kept the pressure on copper and led to four-month low price levels.
Chinese demand and stronger dollar
The major copper players, including money managers, were bullish on Chinese demand through March 2016 due to strong economic data. However, the weaker-than-expected Chinese economic data in April, which was followed by the weaker Caixin manufacturing PMI and services PMI, kept the pressure on copper prices.
The recently released economic data, which showed a decline in China’s CPI and unwrought copper imports, signaled weakness in the country’s domestic copper demand and weighed on prices. The recovery of the US dollar, which was beaten down to multiweek lows by weak non-farm payroll data released last week, also kept the pressure on copper.
At 2:11 PM EDT, major copper producers Freeport-McMoRan (FCX), Glencore (GLNCY), BHP Billiton (BHP), and Rio Tinto (RIO) fell by 5.6%, ~4.6%, ~4.7%, and ~3.2%, respectively. The base metal–related SPDR S&P Metals & Mining ETF (XME) fell by ~1.6%.
The next article explains the performance of gold on Friday, June 10.