Copper prices plummet as China demand weakens

Copper prices have fallen to a more than two-month low, reaching $9,485.50 per metric ton on the London Metal Exchange. This decline is attributed to a combination of factors, including the unwinding of bullish positions, rising inventories, and subdued demand in China, the world's largest consumer of metals.

The total exchange copper stocks have surpassed 500,000 metric tons for the first time since August 2021, with LME inventories climbing by 72% since mid-May to 177,750 tons. This surge in inventories has created market pressure, particularly with long liquidation occurring.

Analysts are closely watching technical levels, with $9,500 being a critical point. If prices continue to drop, the next significant level to observe is $9,100. The recent decrease in copper prices follows a peak of $11,104.50 on May 20, with a decline of over 14% linked to weak economic data from China and uncertainties surrounding U.S. interest rates.

Concerns about soft physical copper demand in China have been heightened by a slowdown in industrial profit growth in the country. Rising copper inventory levels and low local premiums in China indicate a lack of robust physical demand to support the positive positioning seen in Western markets.

Other metals have shown varied movements, with LME aluminum slightly decreasing to $2,507 per ton, zinc remaining steady at $2,940.50, lead declining to $2,189.50, nickel rising to $17,165, and tin increasing to $32,200.

The current dip in copper prices reflects a complex interplay of market dynamics, inventory levels, and demand trends, particularly in China. As the situation continues to evolve, market participants will closely monitor key price levels and economic indicators to gauge the future direction of metal prices.