Copper Fell Amid A Notable Rise In LME Stocks

Due to a large volume of warehouse supplies authorized by the London Metal Exchange (LME), copper prices closed yesterday at 847.85, slightly lower by -0.24%. The Shanghai Futures Exchange is tracking inventories, and while they decreased last week, they are still high at 322,910 tonnes, indicating persistent supply issues.

On the other hand, imports from China to Asian warehouses have contributed significantly to the 60% increase in LME-approved warehouse stocks to 167,825 tonnes since mid-May. For the three-month contract, this influx has helped create a record cash copper discount, which is currently at $135 a tonne.

Rising protectionism, such as the European Union’s plans for tariffs on Chinese-made electric vehicles, is putting more pressure on the industrial metals sector. Nonetheless, given the scarcity of copper ore, China’s growing imports of copper scrap suggest that the country is making an effort to find alternate sources. The People’s Bank of China (PBOC) emphasizes flexibility in the use of instruments like interest rates and reserve requirements, maintaining the country’s supportive monetary policy.

China’s refined copper output increased by 0.6% year over year in May, but imports of unwrought copper surprisingly jumped by 15.8% from the previous year, exceeding market forecasts in both production and consumption. The spike in imports is in contrast to the decline in physical consumption brought on by the high cost of copper.

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