Copper prices dropped on Wednesday after reports showing softer manufacturing growth in the US and China.
“Industrial metals are increasingly feeling the weight of a synchronized slowing in US and Chinese growth,” TD Securities analysts led by Bart Melek said in a note.
Copper for delivery in September fell 1.4% from Monday’s settlement price, touching $4.334 per pound ($9,534 per tonne) on the Comex market in New York.
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China’s factory activity expanded in July at the slowest pace in 17 months, with the official Purchasing Managers’ Index (PMI) easing to 50.4 from 50.9 in June, remaining above the 50-point level that separates growth from contraction.
China’s imports of unwrought copper have also been trending lower since the sharp recovery from the coronavirus pandemic amid stimulus spending in the middle of last year.
Imports reached a high of 762,211 tonnes in July of 2020, and have been dropping ever since.
Surging Chinese scrap copper imports that have doubled in the first half of 2021 are also displacing to some extent refined cathode, concentrate, anode, and blister imports, with analysis by Roskill predicting the situation to worsen and potentially cripple the copper price recovery.
Chinese policymakers have been trying to tame surging commodity prices — from coal to copper — that have squeezed manufacturers’ margins in the world’s second-biggest economy.
On Wednesday, China’s Dalian Commodity Exchange said it was investigating 48 cases of “abnormal trading behavior.”
(With files from Bloomberg and Reuters)