Copper prices ticked lower on Thursday, driven by a combination of discouraging data from China, the world’s leading consumer of metals, and a strengthening dollar.
The weaker-than-expected factory activity in China for the third consecutive month in June has heightened the necessity for additional policy measures to counter the sluggish demand.
On the London Metal Exchange, three-month copper saw a slight drop of 0.3% to $8,233 per metric ton as of 08:00 GMT. Similarly, the most actively traded August copper contract on the Shanghai Futures Exchange dipped 0.8% to 67,230 yuan ($9,278.22) per metric ton.
The surge in the dollar can be attributed to recent remarks by U.S. Federal Reserve Chairman Jerome Powell, who left the door open for more interest rate hikes during the next meeting and reiterated that two rate increases are likely to take place this year.
China’s industrial firms have experienced a double-digit percentage decline in annual profits over the first five months of this year due to weakening demand, as revealed by data on Wednesday. With base metals being extensively used in various economic sectors and the manufacturing industry, the decline in factory activity raises concerns about future demand.
Jinrui Futures, in a note, highlighted that domestic copper supply is expected to rebound after July, but cautioned that downward pressure could persist in the future. They also emphasized the gloomy medium and long-term macroeconomic outlook.
