Commodity Blog

Copper futures are trading lower on Wednesday after investors took profits once the industrial metal settled at its best level in three years. The red metal was further impacted by growing supplies and a strengthening US dollar.

March copper futures tumbled $0.026, or 0.81%, to $3.251 per pound at 16:39 GMT on Wednesday on the Comex division of the New York Mercantile Exchange. Copper prices are trading at their best levels since the beginning of September.

Following a month of strong gains, copper prices posted a 30% gain in 2017, which is one of the best annual performances for the red metal in a few years.

With the industrial metal reaching a three-month high, traders are selling and taking the profits. Analysts say that investors believe there is not any strong evidence to suggest that copper prices will continue their impressive gains in the short-term.

The US dollar is trading lower as the greenback surged 0.25%. The greenback suffered a 9.8% loss in 2017, and is now trading at pre-election lows. A stronger US dollar is bad for commodities like copper because it makes it more expensive for foreign investors to purchase.

Copper is further falling from growing supplies as China plans to enhance its smelting capacity expansion in 2018. There are reports that copper companies are engaging in lower treatment charges than last year, a trend that would spur production. Chile’s National Statistics Institute also reported that the nation’s copper output climbed 4.8% year-on-year in November. These factors ignited the fierce copper selling on Wednesday.

Investors will now look ahead to the contract negotiations between Chilean miners and 32 unions. Last year, strikes and supply disruptions in South America and Southeast Asia helped copper record massive gains, which attributed to a bulk of the red metal’s 2017 increases.

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