On Thursday, the London Metal Exchange (LME) copper futures closed significantly lower, as the strong US dollar brought pressure, and the power restrictions in the number one consumer country also raised concerns about the demand outlook.
As of 1550 GMT, three-month copper on the LME benchmark closed down 2.4% to $8,934/ton.
Analysts believe that the Fed may begin to reduce the size of monthly bond purchases in November, and the rate of interest rate hikes may also be higher than expected, which boosted the U.S. dollar to its highest point in the next year. Copper is often used as an indicator of the health of the global economy. If the Fed raises interest rates early, it will slow down the pace of US economic growth.
The tightening of US monetary policy may boost the strength of the US dollar and put pressure on the metal quoted in the US dollar, because it makes the metal priced in the US dollar more expensive for holders of other currencies. Analysts said the U.S. dollar was boosted by some safe-haven buying, mainly because of macro concerns and the possibility that the Fed may announce its withdrawal from the current monetary stimulus policy at the next meeting.
In addition, the outside world has many concerns about China’s economic growth, supply chain, and power rationing. Economic data released on Thursday showed that high raw material prices and power cuts put pressure on Chinese manufacturers, which led to an unexpected contraction in Chinese factory activity in September. The manufacturing PMI index in September fell to 49.6 from 50.1 in August, which was lower than the ups and downs of 50.
In the United States, the number of states applying for unemployment benefits has unexpectedly increased for the third consecutive week. Last week, the number of people applying for unemployment benefits for the first time increased to 362,000. This indicates that the new crown epidemic driven by the delta mutant virus is resurgence and may be affecting the labor market.
However, the decline in copper stocks on the exchange will help limit the downside of copper. On the Shanghai Futures Exchange, copper stocks fell to 43,525 tons on Friday, 2.5% less than a week ago and the lowest level since May 2009.
In the LME registered warehouse, the copper warehouse receipt is 124,200 tons, which is also the lowest level since June.
In addition, the premium of LME spot copper over the three-month contract rose to $19, which is also the highest point since August 23. Reflects the recent tight supply.
Chile’s statistical agency INE stated that Chile’s copper output fell to 466,928 tons in August, a 4.6% year-on-year decrease.
The closing situation of other metals included the LME aluminum price fell 1.7% to US$2,861 per ton, the price of zinc fell 1.3% to US$3,014 per ton, the price of lead fell 1.1% to US$2,114.50 per ton, and the price of nickel fell 2.13%. It is quoted at US$17,995 per ton.
Link to this article：Overview of LME base metals on August 2021, 09
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