New York, September 19: Copper futures on the Chicago Mercantile Exchange (COMEX) fell on Tuesday, mainly due to concerns about the demand outlook. Markets are also awaiting the Federal Reserve's currency policy decision on Wednesday.
As of the close, copper futures fell by 2.75 cents to 3.25 cents, with the most actively traded December 2023 copper futures falling by 3.2 cents or 0.85% to close at $3.747 per pound.
December copper futures traded in a trading range of $3.728 to $3.781.
Copper is mainly used in the power and construction industries. U.S. single-family home construction fell in August, data showed on Tuesday, possibly as rising mortgage rates dampened demand for new construction. U.S. homebuilder confidence fell for a second straight month in September, data showed on Monday, as high interest rates cut affordability for potential buyers.
The Federal Reserve will announce an interest rate decision on Wednesday after concluding its two-day policy meeting. Markets expect the Fed to keep interest rates unchanged, but investors will be watching for any new signs of possible further rate hikes.
Federal Reserve officials will release their latest forecasts for the U.S. economy and interest rate levels for the next few quarters on Wednesday. There are concerns that the Fed may need to keep interest rates high for longer. The recent rise in oil prices has made it more difficult for the Federal Reserve to control inflation.
Federal funds futures traders see a 29% chance of a Fed rate hike in November and a 40% chance of a December rate hike, according to CME Group's FedWatch tool.
The recent COMEX copper futures contract has fallen 1.55% so far this month and 2.40% so far this year. The closing price on Tuesday was 4.68% higher than the same period last year, but it was still 24.65% lower than the historical peak hit on March 4, 2022.
Copper fell 14.6% in 2022 as global economic growth prospects are 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 Tuesday, the Shanghai Futures Exchange's October 2023 copper contract closed down 600 yuan at 68,800 yuan per ton. Bonded copper futures for January on the Shanghai International Energy Trading Center (INE) fell 510 yuan to 61,140 yuan per ton.
On Tuesday, the trading volume of COMEX copper futures was 67,633 lots, compared with 55,077 lots on the previous trading day; the short volume was 197,540 lots, compared with 196,608 lots on the previous trading day.
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