“Copper Prices Surge: Implications and Insights from Global Markets”

The London Metal Exchange (LME) witnessed a significant surge in benchmark three-month copper prices, reaching $8,799 per metric ton, marking the highest point since August 1, 2023. As of 1055 GMT, it stood at $8,790, reflecting a 1.6% increase in trade.

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Copper Prices

This uptrend commenced on the Shanghai Futures Exchange (SHFE), where Copper Prices soared to a two-year peak, hitting 70,460 yuan ($9,796) per ton. The catalyst for this surge was the consensus reached by China’s major copper smelters during a meeting in Beijing on Wednesday. Although the agreement implied a symbolic reduction in loss-making production, specific details regarding volumes and timelines remained undisclosed.

Market observers interpreted this move as a reactionary response, with heightened interest witnessed on the SHFE following China’s production cut announcement. Amidst rising operational costs, the reluctance to acknowledge unprofitability has prompted a scramble among industry players.

The prevailing shortages have intensified competition for mined copper concentrates, precipitating a significant decline in smelter revenues to levels not witnessed in a decade. Brian Peng, a copper analyst at consultancy CRU, underscored the impending pressure on global concentrate supply, citing approximately 1.7 million tons per year of new ex-China smelter projects slated for the second half of the year.

Satellite surveillance data tracking metal processing plants revealed a greater number of global copper smelters remaining non-operational in the first two months of the year compared to the corresponding period last year, primarily attributable to Chinese inactivity.

However, the surge in copper prices may exert a dampening effect on demand in Copper Prices China, the largest consumer of the metal, as evidenced by inventory levels. SHFE-monitored copper inventory witnessed a steep rise to 239,245 tonnes as of March 8, up from 30,905 tonnes at the beginning of the year.

Clarity regarding demand prospects is anticipated with the release of China’s loan data scheduled for this week. This data, encompassing total social financing figures, serves as a crucial indicator of future metals consumption, offering insights into the trajectory of copper demand in the market.

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