Mumbai, 15 Feb 2024 (Commoditiescontrol):Copper experienced a notable increase in value on Thursday, driven by a combination of a retreating U.S. dollar and sustained demand from China, the world's leading consumer of the metal.
In the London Metal Exchange, the three-month future for copper witnessed a 0.7% rise, reaching $8,252 per metric ton. This uptick in prices comes as the dollar index, after hitting a three-month peak earlier in the week, showed signs of weakening. The decrease in the U.S. currency's strength renders dollar-denominated metals more affordable for buyers using other currencies.
Despite this, market sentiments remain cautious. Investors are bracing for prolonged high U.S. interest rates following unexpectedly high U.S. inflation data released on Tuesday. This development hints at potential delays in the anticipated rate cuts by the Federal Reserve.
Carsten Menke, a commodities analyst at Julius Baer, commented on the situation, noting, "With the manufacturing cycle having bottomed out, we expect a normalization of bearish sentiments. The robustness of China's manufacturing data is often undervalued, but it continues to demonstrate resilience." Notably, China's official Purchasing Managers' Index (PMI) showed a modest recovery in January, though it still indicates a contraction phase, remaining below the pivotal 50-point threshold.
Julius Baer has set a three-month price target for copper at $8,500 a ton and maintains a bullish long-term outlook. This optimism is grounded in the scarcity of new greenfield mining projects. "By 2025, we anticipate more pronounced supply challenges due to a prolonged period of underinvestment in mining," added Menke.
Supporting the positive trend in copper, the latest data from the LME revealed a drop in copper stockpiles in its registered warehouses, falling to 132,525 tons - the lowest since September.
In related news, LME zinc prices also saw an increase, rising 1.5% to $2,347 a ton. This surge follows the influx of 5,000 tonnes into LME warehouses in Singapore, bringing the total to 259,825 tons, the highest since June 2021. Analysts attribute some of these recent deliveries to rent-sharing deals initiated by major trading firms.
(By Commoditiescontrol Bureau; +91-9820130172)
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