Copper prices continued to slump on Friday, hitting their lowest point of the month amid a global sell-off in equities and a firmer US dollar, which made greenback-priced metals less appealing to holders of other currencies.
Copper futures on the Comex were down 0.2% to $3.57 a pound (or about $7,780.54 a tonne) by noon EST.
Elsewhere, the most actively traded March copper contract on the Shanghai Futures Exchange fell 1.4% to 58,000 yuan ($9,023.45) per tonne, after falling as much as 2% earlier.
Weaker equities also hurt risk sentiment across asset classes and raised concerns about liquidity in financial markets.
“Fundamental is supportive but macro is not,” analyst He Tianyu of consultancy firm CRU Group said in a note to Reuters, adding that demand for copper in top consumer China ahead of the Lunar New Year holiday has been better than the same period in previous years.
“The Chinese government encourages workers to celebrate the holiday locally. That means working days will be longer than before,” he said.
According to an S&P Global report released last week, industry analysts are predicting the rise in copper prices to continue in 2021 on low inventories and a bullish demand narrative, though at a slower pace.
Mining analysts at Canaccord Genuity expect Chinese stimulus to support copper demand in combination with an expected global economic recovery in 2021.
“We now expect copper prices to average $3.50/lb ($7,716/mt) in 2021, an approximate 17% increase on our previous forecast of $3.00/lb ($6,614/mt),” Canaccord said.
(With files from Reuters)