New York, September 21: Copper futures on the Chicago Mercantile Exchange (COMEX) fell more than 2 percentage points on Thursday, hitting a five-week low, with trading volume significantly enlarging due to concerns about the duration of the Federal Reserve’s restrictive monetary policy. More than expected, investors' risk appetite was hit.
As of the close, copper futures fell by 7.35 cents to 8 cents. Among them, the most actively traded December 2023 copper futures closed at US$3.696/lb, down 8 cents or 2.12% from the previous trading day. This It was the lowest one-day decline since August 1, and the closing price was the lowest since August 16.
December copper futures traded in a trading range of $3.634 to $3.747.
Copper futures have fallen on four of the past five trading days.
Federal Reserve officials' speeches after Wednesday's meeting strengthened their hawkish monetary policy stance, and another interest rate hike is expected before the end of this year. Higher borrowing costs will dampen economic growth and commodity demand. The Fed expects the peak interest rate this year to be in the range of 5.50% to 5.75%, 25 basis points higher than the current range.
The Federal Reserve's hawkish stance also caused the dollar to rise to a six-month high. The ICE U.S. Dollar Exchange Rate Index closed at 105.044, up 0.24% from Wednesday. This is also the highest value since March. A stronger dollar means dollar-priced metals are more expensive for holders of other currencies, curbing demand and prices.
COMEX copper futures are down 2.81% so far this month and 3.65% so far this year. Thursday's closing price was still 4.80 higher than the same period last year. For comparison, COMEX copper futures fell 14.58% in 2022, reflecting concerns about the global economic growth outlook. High inflation has prompted European and American central banks to actively raise interest rates to curb inflation, while rising borrowing costs have intensified the risk of economic recession. In the medium to long term, the green transition of the global economy and the electrification of the global economy could help boost additional demand for this widely used metal in the power and construction industries, while copper mine production has been disrupted.
On Thursday, the most actively traded October copper futures contract on the Shanghai Futures Exchange closed down 250 yuan to 68,700 yuan per ton. Shanghai International Energy Exchange (INE) January bonded copper fell 230 yuan to close at 60,960 yuan per ton.
On Thursday, the trading volume of COMEX copper futures was 141,915 lots, compared with 53,540 lots on the previous trading day; the short volume was 201,231 lots, compared with 201,097 lots on the previous trading day.
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