Copper at 17-month low as global industrial activity eases

Copper prices continued their sharp decline, hitting 17-month lows today, as new Covid-19 restrictions in China, slowing global industrial activity and rising inventories fueled concerns about demand for the metal, sparking a sell-off. off.

In particular, the price of copper on the London Metal Exchange (LME) fell intraday to as low as $7,918 a tonne, recording the lowest since February 2021.

“Manufacturers in China have had a very bad time. People are afraid of inflation and recession, but the chance of a recession is less than 50%,” notes Dan Smith, managing director of Commodity Market Analytics.

“The market needs to find a bottom, but industrial metals are starting to show that they have good investment value,” he adds.

It is noted that stocks of copper, the metal primarily used in energy and construction, in the authorized warehouses of the LME increased by 10,100 tons to 136,950 tons. In total they have jumped by more than 20% since last week.

Characteristic of the current trend is that Marex Analytics estimates that short positions in copper – bets that its price will fall – have risen to the highs of 2015, when economic growth in China slowed to a 25-year low.

According to Marex, on June 30 short positions in copper were 1.5 million tons or a total of 43.6% of open positions in the metal, while a week earlier on June 23 they stood at 1 million tons or 29, 8% of all open positions.