U.S. inflation statistics that sparked worries about possible delays in high-interest rate cuts caused copper to close down by -0.25% at 705.9. Interest rate reduction forecasts were recalculated by traders in response to the surprisingly high U.S. consumer price index in January.
Based on the present pricing of Federal funds futures, LSEG’s rate likelihood tool shows that there is less than a 50% possibility of a rate easing in May and no rate drop in March. Copper stocks in LME-registered warehouses decreased, hitting their lowest point since September following 850 tonnes of withdrawals, according to LME daily data.
The manufacturing sector in China shrank for the fourth time in a row, according to official PMI statistics, illustrating the country’s ongoing difficult macroeconomic conditions, which negatively impacted base metals prices. Factory sales of metal declined steadily, and big Chinese warehouse inventories surged by over 120% year-to-date to around 70,000 tonnes.
These factors contributed to the persistent drop in the Yangshan copper premium. Initial data from January suggested that global copper mine production increased by 1% over the first 11 months of 2023, according to the International Copper Study Group (ICSG). From a technical standpoint, open interest fell by -5.95% to settle at 4981, indicating a protracted liquidation of the market. The price decrease was -1.75 rupees.
