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Copper Futures Recover from Monday’s Steep Losses

June 6, 2017 at 17:00 by Andrew Moran

Copper prices are recovering from Monday’s massive losses. As investors discover an immense increase in Shanghai inventories and a strengthening US dollar, traders sold the industrial metal. Copper futures were still down on the second trading day of the week.

July copper futures tumbled $0.01, or 0.50%, to $2.545 per pound at 16:40 GMT on Tuesday. The red metal shed as much as 4% to start the trading week, continuing its lackluster 2017. Year-to-date, copper prices have advanced a tepid 1%, but it could receive a boost sometime this summer.

On Friday, newly released data highlighted that copper inventories in warehouses tracked by the Shanghai Futures Exchange jumped 4.9% last week. This represents the third straight weekly inventory increase.

The US dollar has risen nearly 1% this week. A stronger greenback is bad for commodities like gold, silver, and copper because it makes it more expensive for foreign investors to acquire.

Extended losses were capped on Tuesday thanks to a new report that found China’s services sector swelled at the quickest rate in four months in May. This is because of a plethora of new orders, which suggests that the nation’s manufacturing weakness is not as worse as previously expected. China consumes half of the planet’s copper.

Copper futures may see some relief because of potential supply disruptions in Indonesia. It was reported that mining rates may be severely impacted at the Grasberg copper mine due to strikes.

Moreover, the Trump administration is expected to lay out its plan to spend $1 trillion on infrastructure. US President Donald Trump pledged to invest more than $1 trillion on roads, bridges, and other construction projects, all of which would require vast amounts of the red metal. Reports suggest that an announcement could be made as early as this month.

Other metals are rallying on Tuesday. August gold futures spiked $11.90, or 0.93%, to $1,294.60 per ounce. July silver futures climbed $0.08, or 0.48%, to $17.66 an ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

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