On Monday, September 1st, the price of copper approached the key threshold of $10,000 per ton on the London Metal Exchange. Since last month, the price of copper has been steadily rising driven by a softening US dollar and relatively robust demand.
Following a 3% increase in August, the price of copper rose by 0.3% on Monday, reaching $9,928 per ton. A weakening US dollar typically benefits dollar-denominated commodities as they become cheaper for non-US buyers.
The last time copper surpassed the $10,000 mark was back in July this year. Despite President Trump not imposing tariffs on this most commonly traded copper product and some predictions of a price decline, copper has shown resilience. Copper futures prices in the US still remain higher than the London benchmark, and copper continues to flow into the US.
With the market betting on the Federal Reserve announcing a rate cut at the next meeting and concerns among investors over Trump’s firing of Fed board member Lisa Cook, the Bloomberg Dollar Spot Index has softened. Following a US court ruling on Monday declaring many of Trump’s global tariff measures illegal, the US dollar further weakened.
According to data from Zijin Mining Group, explicit copper consumption in the Chinese market increased by about 10% in the first half of this year, but warnings of a slowing market demand outlook in the second half have already emerged.
Analysts at Goldman Sachs noted in a report released on August 29th, “There are signs of weakness in overall economic activity in China, and in recent months, the growth rate of explicit copper consumption has slowed, in line with market expectations.”
(Reference: Bloomberg)