Disruptions in mine-side operations were the main driver of copper’s slight rise, which saw it settle up 0.42% at 715.4. Significantly, smelters’ desperate attempts to find raw materials have resulted in a drop in copper prices in China, which might threaten the margins of Chinese companies and possibly lower their output of refined copper.
Surprising the markets, the People’s Bank of China (PBOC) kept the rate on its one-year medium-term loan facility at 2.5% even though it increased liquidity injections. This move exposed the central bank’s juggling act between growth targets and market pressures, defying expectations for additional policy easing to assist economic growth.
Decline in producer prices in December was 2.7% and consumer prices fell by 0.3%, respectively, indicating that China is facing deflationary forces. Now, in order to obtain more understanding of the status of China’s economy, investors are anxiously anticipating important economic indicators, such as Q4 GDP numbers, industrial production, and December retail sales.
Worldwide, the International Copper Study Group (ICSG) reports that the 53,000 metric tons shortfall in the refined copper market in October represented a minor improvement over the 56,000 metric tons shortfall recorded in September. With an 8.8% decrease in open interest and a settlement price of 5910, the copper market appears to be experiencing short covering from a technical perspective.
