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Copper Crashes Under $3 as Inventories Rise, US Dollar Surges

December 5, 2017 at 18:32 by Andrew Moran

Copper futures are trading under $3 for the first time since the end of September as the industrial metal cratered on Tuesday. Amid rising inventory levels and a surging greenback, copper has fallen as much as 5%.

March copper futures tumbled $0.141, or 4.56%, to $2.949 per pound at 17:07 GMT on the Comex division of the New York Mercantile Exchange. The red metal could settle at its lowest level since October 5.

Copper prices are being impacted by climbing inventory volumes. Reuters is reporting that inflows of stocks at warehouses registered with the London Metals Exchange (LME) are rising as copper headline stocks jumped 10,650 tonnes to 192,500 tonnes.

The US dollar is also affecting the industrial metal as the greenback surged 0.40%. A stronger US dollar is bad for commodities like copper because it makes it more expensive for foreign investors to purchase.

Investors were also combing through the details of a new report from BMI Research. Analysts project that copper prices will consolidate next year because of a significant slowdown in China’s consumption growth. The world’s second largest economy is the biggest buyer of the industrial metal.

In particular, we see metals such as steel, aluminium, and copper at risk of a supply crunch as the government looks to curb production growth and potentially ban imports of scrap for environmental reasons.

Despite strong Chinese services data on Tuesday, experts note that weaker-than-expected manufacturing data published on Friday had a greater impact on copper prices.

Copper has had a great 2017, stemming from work stoppages, supply disruptions, and promises from governments to increase infrastructure spending. Year-to-date, copper prices have advanced nearly 17%, which is one of its best performances in several years.

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