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Copper Prices Surge on US Dollar Weakness and China Optimism

17 May 2024 4:50 pm
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Mumbai, 17 May (Commoditiescontrol): Copper prices witnessed a remarkable surge this week, driven by a short squeeze in COMEX copper and buoyed by optimistic sentiment in the Chinese market. This comes as US economic data disappointed, leading to a consecutive decline in the US dollar index.

US Economic Indicators Raise Concerns

Despite the US Federal Reserve's hawkish stance on interest rates, April's CPI figures fell short of expectations, and the one-year inflation forecast exceeded market predictions. This confluence of factors put downward pressure on the US dollar, indirectly bolstering copper prices.

Eurozone and Japanese Economies Struggle

The eurozone's revised GDP growth for the first quarter came in at a modest 0.4%, while Japan's economy contracted by an annualized rate of 1.2%. These figures highlighted the global economic challenges, yet the euro managed to gain against the US dollar during the week.

China's Steady Growth and Supportive Policies

China's economic landscape presented a more positive picture, with a stable annual CPI rate of 0.3% in April. While the A-share market experienced a brief dip, it rebounded on the back of the People's Bank of China's supportive policies targeting the real estate sector. This positive domestic sentiment further fueled the upward momentum of copper futures.

Copper Market Outlook: Bullish Trend Anticipate

Market analysts predict a continued bullish trend for copper prices in the coming week, fueled by overseas capital inflows and potential easing of US inflation expectations. LME copper is projected to trade between $10,000-10,600/mt, while SHFE copper prices are expected to range between 80,500-84,500 yuan/mt. In China, spot discounts against the SHFE 2406 copper contract are estimated to hover between 300-150 yuan/mt.

(By Commoditiescontrol Bureau; +91-9820130172)

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