New York, September 13: Copper futures on the Chicago Mercantile Exchange (COMEX) rose slightly on Wednesday. U.S. inflation data rose modestly, with markets expecting the Federal Reserve to keep interest rates unchanged next week. Meanwhile, traders weighed the impact of a series of Chinese policies on metals demand.
As of the close, copper futures rose by 0.05 cents to 0.4 cents, with the most actively traded December 2023 copper futures rising by 0.1 cents or 0.03% to close at $3.793 per pound.
December copper futures traded in a trading range of $3.77051 to $3.8195.
Data from the U.S. Bureau of Labor Statistics show that the Consumer Price Index (CPI) rose 0.6% last month, the largest increase since June 2022, mainly due to a 10.6% increase in U.S. retail gasoline prices last month. The core inflation rate, which excludes food and energy prices, rose 4.3% year-on-year in August, down from 4.7% in July. This is also the inflation indicator that the Fed is more concerned about. Traders expect the Fed to keep interest rates unchanged next week, according to the FedWatch tool.
The market is paying close attention to the demand prospects of China, the top metal consumer. China has recently released a series of support measures to revive the troubled real estate market, and market participants are assessing the actual impact of the policies on spot demand.
Traders are awaiting a seasonal pickup in demand after the summer as construction and manufacturing activity accelerates.
The recent COMEX copper futures contract has fallen 0.44% so far this month and 1.30% so far this year. The closing price on Wednesday was still 5.94% higher than the same period last year.
The current copper price is 23.80% lower than the historical peak of $4.929 hit in March 2022, as high interest rates in Western economies have suppressed economic growth and commodity demand, while China's economic performance has been weaker than earlier expectations.
COMEX copper futures fell 14.6% in 2022, mainly because the global economic growth outlook is worrying. High inflation has prompted European and American central banks to actively raise interest rates to curb inflation, exacerbating the risk of economic recession. By comparison, copper in 2020 and 2021 has recorded gains of 25% for two consecutive years. The green transformation of the global economy and electrification have helped boost additional demand for this metal widely used in the power and construction industries, while copper mines are facing Disruptions such as underinvestment and production disruptions.
On Wednesday, the October 2023 copper contract on the Shanghai Futures Exchange fell 200 yuan to 69,110 yuan per ton. Bonded copper futures for January 2024 on the Shanghai International Energy Trading Center (INE) fell 200 yuan to 61,180 yuan per ton.
On Wednesday, the trading volume of COMEX copper futures was 59,384 lots, compared with 49,756 lots on the previous trading day; the open volume was 196,198 lots, compared with 196,698 lots on the previous trading day.
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