NEW YORK, Aug. 23: Copper futures on the Chicago Mercantile Exchange (COMEX) rose for a fifth straight session on Wednesday, as firm demand data from China and a weaker dollar supported gains in copper prices.
As of the close, copper futures rose by 4.8 cents to 5.3 cents, of which the most actively traded September 2023 copper rose 5.3 cents, or 1.37%, to close at $3.8085 per pound.
September copper traded in a range of $3.757 to $3.8155.
In China, copper consumption demand showed signs of improvement. Spot copper prices have attracted more buying after falling for three straight weeks. The market expects copper demand in China to improve from September onwards (traditionally peak demand season). In addition, sales in the Chinese auto market improved in the first half of August; the planned output of air conditioners in August increased by 21.7% year-on-year, and other home appliances also benefited from the improvement in exports.
In the United States, the dollar weakened against a basket of currencies on Wednesday after data showed U.S. business activity came to a near standstill in August, with growth slowing to the weakest level since February.
S&P Global said its U.S. composite PMI index, which tracks the manufacturing and services sectors, fell to 50.4 in August from 52 in July, the biggest drop since November 2022.
On Wednesday, the ICE U.S. Dollar Index closed at 103.333, down 0.14% from Tuesday. A weaker dollar means copper is more attractive to buyers holding other currencies.
Federal Reserve Chairman Jerome Powell will speak on the economic outlook at Jackson Hole on Friday at 10:05am ET (1405GMT). The market is looking forward to Powell's speech to provide more clues about future monetary policy.
The near-term COMEX copper contract is down 4.78% so far this month and down 0.05% so far this year. Closing prices rose 3.91% on Wednesday from a year earlier. Current copper prices are 22.83% below their all-time peak of $4.929 in March 2022, as high interest rates weigh on economic growth and commodity demand, while China's economy is performing worse than earlier expected.
Copper futures on COMEX fell by 14.6% in 2022, mainly because the outlook for global economic growth is worrying. High inflation prompted European and American central banks to actively raise interest rates to curb inflation, exacerbating the risk of economic recession. In contrast, copper has recorded two consecutive years of gains of 25% in 2020 and 2021, as the green transition of the global economy and electrification help boost additional demand for the metal, which is widely used in the power and construction industries, while copper mines face challenges. Disruptions such as underinvestment and production disruptions.
The October 2023 copper contract on the Shanghai Futures Exchange rose 600 yuan to 68,870 yuan a tonne on Wednesday. Bonded copper futures for October delivery on the Shanghai International Energy Exchange (INE) rose 730 yuan to 61,190 yuan a tonne.
On Wednesday, the trading volume of COMEX copper futures was 109,089 lots, compared with 120,010 lots in the previous trading day; the volume of short positions was 211,645 lots, compared with 215,715 lots in the previous trading day.
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