Copper Stockpiles in China Decline, Indicating Potential Market Recovery
Copper stockpiles in China, which had surged earlier this year, are showing signs of decline, suggesting that buyers may be returning in the world’s largest consumer of commodities.
Inventories of the industrial metal on the Shanghai Futures Exchange fell for the third consecutive week, reaching their lowest level in over a month.
The price of copper has dropped about 13% from last month’s record highs due to concerns about increasing global inventories, profit-taking by investment funds, and subdued Chinese demand. This price reduction may now be attracting buyers back to the market.
Throughout this year, copper has been influenced by competing forces. Bullish fund managers in London and New York have invested tens of billions of dollars into copper, anticipating future shortages. However, Chinese purchasers have been hesitant due to a weak property market and previously soaring prices.
On Friday, copper, along with other base metals, rose ahead of the release of the Federal Reserve’s preferred gauge of underlying inflation.
A low reading could benefit industrial commodities by potentially prompting the US central bank to start cutting interest rates.
Metals have fluctuated in recent days—during a major London Metal Exchange event in Hong Kong—as traders consider an uncertain demand outlook marked by tepid global growth.
Nonetheless, the LMEX Index of six base metals is on track for a fourth quarterly advance. Copper rose 1.2% to $9,626.50 a ton in London by 11:44 a.m., ending a five-day losing streak. Other base metals also increased, with zinc gaining 1.2% to reach its highest level in three weeks, while aluminum added 1.7%.
