Copper price today June 24 decreased due to surplus in China

Copper prices fall as high inventories weigh.

A pound of copper was at $4.376, down 11% from $4.925 on May 20, with metal stocks in warehouses on the Shanghai Futures Exchange hitting a four-year high of 330,000 tonnes this month.

With a copper glut in China, cathode imports from the London Metal Exchange were sold this week at a discount of $14/t, a rare situation.

High prices also weaken manufacturing demand and could see China switch from copper to aluminium, a topic at the annual meeting of the China Nonferrous Metals Industry Association next month.

“Copper utilization remains very low at around 52%, well below year-ago levels,” Colin Hamilton, head of commodities research at BMO, wrote in a note. “We expect the discussion of replacing copper with aluminum to intensify following the ‘saving copper with aluminum’ conference in early July,” the analyst said the following day.

With prices high, producers are using their reserves before buying new metal, especially when demand for copper products is low. China’s real estate market has been in a slump for the past few years as companies have become over-indebted and gone bankrupt. The country’s copper inventories typically build up early in the year, then fall as factories ramp up operations after the Chinese New Year holiday, which falls between Jan. 21 and Feb. 20.

However, copper supplies outside China remain low, traders said. Inventories on the New York Mercantile Exchange (COMEX) have been surprisingly low even after prices surged in May, forcing traders to close positions in which they bet prices would fall, known as short selling.

“This points to challenges in getting suitable copper to COMEX warehouses, with the majority of available global volumes originating from China or Russia,” Hamilton said. “We still see signs of fundamental weakness, but if traditional short positions remain, the likelihood of another squeeze is high, which is the main risk to copper continuing to fall at the moment.”

Elsewhere, predictions of a copper shortage have not materialized even after Panama closed First Quantum Minerals' Cobre Panama mine in December and traders eyed a slew of new smelters due to start production in China, Indonesia, India and the Democratic Republic of Congo within two years.

China is recycling more copper than usual and its smelters are not reducing output beyond annual maintenance levels, although officials are looking into it and satellite intelligence detected a slowdown in March.

Source: https://kinhtedothi.vn/gia-kim-loai-dong-ngay-24-6-giam-do-du-thua-tai-trung-quoc.html