Key Takeaways
- Copper prices remained near record highs on Thursday.
- Oil prices breached $100 per barrel, adding to inflation concerns.
- Tight supply of copper outside the US continues to support prices.
Copper prices remained near record highs on Thursday, with the benchmark three-month copper on the London Metal Exchange trading at $14,757 a metric ton as of 0330 GMT. This was a slight drop from the record $14,858.50 reached on Wednesday.
The most-traded copper contract on the Shanghai Futures Exchange rose 0.49% to 111,660 yuan ($16,646.54) a ton, reflecting the global trend in the commodity market.
Despite the slight dip, the overall trend in copper prices remained strong, with investors keeping a close eye on US inflation data due on Friday. The data could provide further insights into the economic outlook and the demand for industrial metals.
Oil prices, which have been a key factor in the overall market sentiment, breached $100 per barrel, adding to inflation concerns and pushing global bond yields higher. This has led to tighter financial conditions, which could weigh on economic growth and demand for industrial metals.
The conflict in the Middle East has further exacerbated inflation concerns, as it adds to the geopolitical risks and supply chain disruptions. This has led to a cautious approach among investors, who are closely monitoring the situation.
Large stockpiles of copper remain concentrated in the US after months of inflows ahead of potential tariffs. However, readily available metal in other markets remains tight, with COMEX copper inventories edging up to 767,495 short tons, or 696,260 tons as of Wednesday.
The LME cash copper premium against three-month has dwindled to as low as $23.50 a ton from $545 reached in mid-August, implying some inflow into LME warehouses has helped relieve near-term tightness. However, this does not significantly impact the overall market sentiment.
Investors are also awaiting US consumer inflation data due on Friday, which could provide further clarity on the economic outlook. Markets are currently pricing in around a 60% chance of a Federal Reserve rate increase this month, higher since the release of robust US jobs data last week.
Among other LME metals, aluminium fell 0.33%, zinc dropped 0.75%, lead lost 0.21%, and nickel edged down 0.04%, while tin gained 0.84%. On the SHFE, aluminium fell 0.12%, zinc rose 0.09%, lead slipped 0.12%, nickel gained 0.84%, and tin jumped 1.77%.
