Copper is experiencing a significant price drop, attributed to an increase in inventory levels and a decline in interest from Chinese buyers.
This is reported by Finway
Reasons for the Decline in Copper Prices
In recent sessions, the price of copper has noticeably decreased: on the previous day, quotes fell by 3.2%. This trend is explained by new signals of weakening demand in the spot market in China, as well as a sharp increase in inventory levels at the London Metal Exchange warehouses in the Asian region.
According to analyst Fang Rui from Guoyuan Futures Co in Beijing, traders redirected shipments that were previously destined for the United States to London Exchange warehouses in other countries after premiums in the United States decreased.
“The increase in inventory indicates that traders redirected shipments intended for the U.S. to London Exchange warehouses in other countries following the drop in premiums in the States,” said Fang Rui, an analyst at Beijing’s Guoyuan Futures Co.”
Demand from the Energy Sector and Changes in Commodity Markets
Despite the overall reduction in interest, signs of sustained demand from Chinese energy networks remain in the market. The State Grid Corporation of China, the leading consumer of copper in the country, reported a 35% increase in investments in fixed asset development to $4.4 billion in January. The funds will be directed towards the construction of ultra-high voltage networks and pumped storage power plants. This corresponds to a 40% increase in the budget for the next five years, which could positively affect future demand for copper.
As of 5:18 PM Kyiv time, the price of copper per ton had fallen to $12,953.50, while one kilogram cost $12.95.
The price decline is not only characteristic of copper: against the backdrop of easing global tensions following discussions between the leaders of China and the U.S., as well as planned negotiations with Iran, prices for other commodities have also fallen. In particular, gold prices decreased by 2%, silver dropped by 15%, and iron ore fell by 2% due to high inventory levels.