Copper prices slump to two-week low as China’s economic woes fuel demand worries; further downside limited, say experts

  • Drop in copper prices is largely attributed to weak economic data from China, particularly in the manufacturing and property sectors, which has heightened concerns about reduced demand for the red metal.

Ankit Gohel
Published4 Sep 2024, 01:40 PM IST
Copper prices slump to two-week low as China's economic woes fuel demand worries; further downside limited, say experts
Copper prices slump to two-week low as China’s economic woes fuel demand worries; further downside limited, say experts(Photo: Bloomberg)

Copper prices plunged to their lowest in more than two weeks as weak economic data in the world’s biggest metals consumer China raised demand concerns.

MCX Copper prices were trading 0.2% lower at 783.80 per kg and hit a low of 780.90 during the session, tracing three-month copper on the London Metal Exchange (LME) that dropped 2% to $8,996.50 a metric ton, its weakest since August 15. US Comex copper futures slid 2.9% to $4.05 a lb.

The drop in copper prices is largely attributed to weak economic data from China, particularly in the manufacturing and property sectors, which has heightened concerns about reduced demand for the red metal.

China’s manufacturing activity fell to a six-month low in August, while the growth in new home prices has slowed, data showed, further dampening copper demand from these key sectors.

Also Read | Gold price today: Rates inch up; can the yellow metal sustain gains?

“China’s ongoing property sector crisis is dampening copper demand. The strengthening of the US dollar, which reached a two-week high, has exerted additional downward pressure on copper prices. Copper inventories have increased at LME-monitored warehouses, adding to market pressure. Copper is trading below its 200-day moving average, indicating further downside risk. Market sentiment remains cautious due to weak global demand and strong dollar influence,” said Ajay Kedia, Director of Kedia Advisory.

Moreover, Goldman Sachs cut its 2025 copper price forecast sharply on Monday, projecting an average price of $10,100 a ton, down from its previous forecast of $15,000, Reuters reported.

Also Read | Oil crashes 5% to hit nine-month low; Brent slips below $74, erases 2024 gains

Outlook for Copper

Kedia believes while the outlook remains cautious for copper, further downside seems to be restricted as potential stimulus measures from China and interest rate cuts by the US Federal Reserve could provide some support.

According to him, the seasonality factor can also support copper prices going ahead as the months of September, October and November are generally positive for the red metal.

“LME copper prices may get support at $8,700 level, while resistance is placed at $9,300 level. MCX copper prices are likely to find support near 768 - 770 levels. On the upside, if price breaches 812 level, it may rise to 828 - 830 levels,” said Kedia.

Read Commodity Market news here

(With inputs from Reuters)

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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First Published:4 Sep 2024, 01:40 PM IST
Business NewsMarketsCommoditiesCopper prices slump to two-week low as China’s economic woes fuel demand worries; further downside limited, say experts

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