Mumbai, 04 Jul (Commoditiescontrol): Copper prices firmed slightly on Thursday as investors balanced optimism over potential U.S. interest rate cuts with concerns about high inventories and lacklustre demand in China. By 5.30 PM IST, three-month copper on the London Metal Exchange (LME) was up 0.1% at $9,875 per metric ton.
This modest increase followed a 2% surge in the previous session, marking copper's biggest daily gain since June 6. Despite this recent uptick, LME copper has decreased by 11% since its record high of $11,104.50 on May 20.
The market's focus has shifted to the potential for U.S. interest rate cuts, which has led to global equities reaching new record highs. Recent U.S. data increased the likelihood of the Federal Reserve cutting interest rates in September, also weakening the dollar index. A weaker U.S. currency generally makes dollar-priced commodities more affordable for buyers using other currencies.
A sustained rally in copper prices, however, would require lower interest rates, an increase in demand, and a reduction in inventories. The market has adopted a wait-and-see approach, with LME copper inventories having surged 80% since mid-May to 186,275 tons. Stockpiles in Shanghai Futures Exchange warehouses have eased slightly in recent weeks but remain ten times the level at the start of the year.
Despite these challenges, analysts suggest that LME copper could test $10,000 per ton in the coming weeks, driven by hopes of Chinese policy easing in July and expectations of a Fed rate cut in September. Any move near the psychological $10,000 level would likely trigger profit-taking unless market fundamentals improve.
In other metals, LME aluminium dipped 0.2% to $2,543.50 per ton, nickel eased by 0.4% to $17,255, lead was down 0.2% at $2,217, tin shed 0.5% to $33,195, and zinc gained 0.6% to $3,007.50.
(By Commoditiescontrol Bureau; +91-9820130172)
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