Copper Slips, Halting Sharp Rebound
By Anna Isaac
Copper prices fell Friday, signaling a pause in the industrial
metal's surge, on mounting concerns that the rally may have been
Copper futures for October delivery slipped about 1% to $6,030 a
metric ton on the London Metal Exchange. The drop comes as
investors struggle to reconcile signs of a global economic recovery
with the surge in coronavirus infections in the U.S., which could
deal a setback to manufacturers. Trading volumes are lower than
usual with U.S. markets closed for the Independence Day
The fall comes after a rally of over 30% in the metal's price
since its rout in March, reflecting optimism about the potential
for a sharp economic recovery, as China and Europe lead large parts
of the world in easing lockdown measures. That has helped erase
most of the commodity's losses for this year.
Copper is considered a barometer for global growth, with traders
dubbing it "Dr. Copper" in reference to its ability to augur
turning points in the economic outlook. But some market watchers
say traders are ignoring the threat posed by the record number of
new daily infections in the U.S., and the risk that economic
recovery world-wide could slow after the initial bounceback of
"There's a little bit of dislocation between copper's price and
the economic reality, partly because it's been an asymmetrical
recovery globally," said Wenyu Yao, a senior commodity strategist
at ING Bank. "But so far, Dr. Copper did it: it delivered a
A revival in Chinese economic activity in recent months has
helped propel copper prices higher. The commodity is particularly
sensitive to the Asian manufacturing powerhouse, as the world's
second-largest economy accounts for a large part of global demand
for the metal. The reopening of major economies in Europe is also
helping bolster demand for the industrial metal, analysts said.
Copper has outperformed metals such as aluminum and nickel,
suggesting that its surge may have been "somewhat exaggerated,"
rather than tightly linked to supply and demand, according to
Daniel Briesemann, a commodities analyst at Commerzbank.
Still, there are few expectations for a sharp correction in
copper prices and some strategists expect the market to continue
Copper prices could reach as high as $6,500 a metric ton in the
second half of this year, Bank of America analysts projected in
June. Stimulus measures from governments around the world seeking
to rebuild their economies would likely push prices higher, they
Supply disruptions from scrap collection to ore mining due to
outbreaks of the virus may also continue to support copper prices.
In Latin America, two major copper producers, Chile and Peru, face
climbing infection rates. This has already caused significant
supply disarray for the metal and some analysts expecting this to
worsen in the coming weeks.
Elsewhere in commodities, Brent crude, the international
benchmark for oil prices, fell 1.3% to $42.58 a barrel Friday.
Write to Anna Isaac at email@example.com
(END) Dow Jones Newswires
July 03, 2020 10:16 ET (14:16 GMT)
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