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Mumbai, 04 Dec (Commoditiescontrol): Copper prices surged on December 3, 2024, across major global exchanges, driven by a weakening US dollar and supportive macroeconomic cues, even as demand concerns lingered.
Market Highlights
On the Multi Commodity Exchange (MCX), December 2024 futures rose ₹12.75 to close at ₹822.55, while January 2025 contracts increased ₹12.70 to ₹819.35. Despite robust trading volumes of 10,385 lots in the December contract, open interest (OI) declined by 839 lots, signaling profit-booking. The January contract, however, gained 150 lots in OI, reflecting fresh buying.
On the Shanghai Futures Exchange (SHFE), December and January contracts closed at CNY 74,070 (+CNY 340) and CNY 74,060 (+CNY 350), respectively. Trading activity remained strong, particularly for January contracts, which recorded nearly 80,000 lots. OI for December contracts dropped by 6,650 lots, indicating position closures ahead of expiry, while January contracts saw a modest OI rise of 24 lots.
The London Metal Exchange (LME) recorded gains with 3-month forward copper advancing $119 to $9,111.50, while cash prices climbed $136.08 to $9,010.21. The narrowing cash-to-3-month spread (-$101.29) reflected improving supply-demand conditions. OI in 3-month forward contracts declined by 203 lots, suggesting caution among market participants.
On COMEX, December futures rose $0.0625 to $4.1380, while January contracts gained $0.0705 to $4.1650. Both contracts saw reduced speculative interest, with December and January OI falling by 715 and 13 lots, respectively.
Inventory Dynamics
Copper inventory data presented a mixed picture:
MCX: Stocks dropped sharply by 4,947.41 tons to 250.66 tons, reflecting increased withdrawals.
SHFE: Inventories inched up by 105 tons to 19,733 tons, indicating steady inflows.
LME: Stocks fell by 2,100 tons to 268,625 tons, highlighting tight supply.
COMEX: Inventories edged up by 72 tons to 91,035 tons, signaling moderate replenishment.
Macro Drivers
A weakening US dollar provided a strong tailwind for copper, improving the appeal of dollar-denominated commodities. Optimism also grew after US Federal Reserve officials signaled openness to an interest rate cut in December, boosting risk appetite across industrial metals. Further support came from OPEC+ sources, indicating that production cuts could extend through Q1 2025, underscoring a bullish outlook for commodities.
Fundamental Trends
Fundamental challenges persist, particularly in China, where demand concerns remain elevated. Downstream enterprises have slowed procurement as year-end approaches, and higher copper prices have weighed on consumption. Meanwhile, increased imports have led to inventory build-ups in eastern China, potentially
capping price gains.
Outlook
Copper prices are expected to trade at elevated levels in the near term, supported by macroeconomic optimism and supply-side constraints. However, demand side challenges, including sluggish procurement and inventory pressure in China, could limit upside potential. Market participants will closely monitor upcoming Federal Reserve decisions, Chinese demand recovery, and developments from OPEC+ for further direction.
As the year-end approaches, copper markets are poised to remain volatile, with prices balancing between bullish macro signals and subdued fundamentals. Traders should adopt a cautious stance while keeping a close watch on macroeconomic and demand-side indicators.
(By Commoditiescontrol Bureau: 09820130172)
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