Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Copper Prices Dip After Surge in Asian Warehouse Stocks

March 8, 2017 at 17:53 by Andrew Moran

Copper prices are trading at eight-week lows after a new report found an increase in Asian supply. Reports suggest that there has been a significant jump in copper warehouse stocks in Asia, a trend that would limit any possible impact of supply disruptions at the world’s largest mines, particularly in Chile and Peru.

May copper futures tumbled $0.013, or 0.5%, to $2.6055 per pound at 16:21 GMT on Wednesday on the New York Mercantile Exchange. This comes one day after the industrial metal plunged nearly 2% to an eight-week low. Year-to-date, copper prices are up close to 4%, primarily due to supply concerns and growing demand.

According to Reuters, copper inventories at facilities maintained by the LME had surged by approximately 39,000 tonnes and Shanghai Exchange stocks spiked by 24,000 tonnes. This is the largest increase in about a decade, and reverses the downward trend that has been occurring since December.

The red metal had been climbing to kick off the year because of potential supply disruptions. Last month, the union workers at the world’s biggest copper operation, Escondida in Chile, went on strike. Peru copper workers have also been striking in recent weeks. These events had sent copper prices higher, but with larger stockpiles the impact appears to be quite minimal.

Reports also suggest that global demand could rise by as much as 4% this year because more governments, such as the US, Canada, the UK, and China, are undergoing massive infrastructure spending projects.

What seems to be having a greater effect on copper prices is the Federal Reserve. Traders are expecting the US central bank to raise interest rates at next week’s Federal Open Market Committee (FOMC) meeting. Commodities like gold, silver, and copper are sensitive to rate hikes because it makes more expensive for foreign investors to purchase, considering they are priced in the greenback.

At the end of last year, copper prices experienced their best week in more than three decades.

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

Leave a Reply