Copper prices have fallen to their lowest levels in two months, driven by concerns regarding the economic policies of incoming U.S. President Donald Trump and their potential impact on China, the world’s largest consumer of metals.
Market Performance:
On the London Metal Exchange (LME), three-month copper prices (CMCU3) decreased by 2%, settling at $9,145 per metric ton by 1700 GMT, marking the lowest price since September 11, when it hit $9,107.
In the U.S., Comex copper futures (HGc2) fell 1.9% to $4.15 per pound.
Investor Behavior:
The decline was attributed to investors selling long or bullish positions, which caused prices to breach key technical levels, leading to further selling pressure.
However, some industrial consumers took advantage of the lower prices, purchasing copper and zinc, which helped mitigate overall losses, according to broker Marex.
Political Context:
Reports suggest that Trump may appoint U.S. Senator Marco Rubio as his secretary of state, a choice viewed as hawkish regarding China. Rubio has been an advocate for a strong stance against China, including the potential for tariffs.
Analysts, including Tom Price from Panmure Liberum, expressed concern that tariffs could significantly harm China’s economy, which is currently more vulnerable than it was in 2018/19.
Seasonal Trends and Demand:
The market is entering a seasonal low period for metals demand in Asia and China, further contributing to the price decline.
The most-traded December copper contract on the Shanghai Futures Exchange (SHFE) dropped 1.6% to 75,310 yuan (approximately $10,406.82) per ton.
Global Economic Factors:
Investor disappointment regarding the scale of China’s stimulus measures has added to the market’s gloom.
Additionally, a strong U.S. dollar, which recently reached a four-month peak against a basket of major currencies, has made dollar-priced metals more expensive for buyers using other currencies, further weighing on demand.