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Shanghai copper falls on first trading session after holiday

May 6, 2024

Key points:

  • Shanghai copper contracts drop 0.7% to 81,180 yuan per metric ton.
  • Firmer dollar makes greenback-priced metals more expensive for holders of other currencies.

Shanghai copper prices fell on Monday tracking losses in London, amid a firmer dollar and a lack of clear demand improvement from the troubled Chinese property market.

Candle chart showing slight decline of Copper on the VT Markets trading app

Picture: Copper prices see a decline on VT Markets app.

Post-holiday copper prices dip

In the first trading session after the holiday, the most-traded June copper contract on the Shanghai Futures Exchange (SHFE) slipped by 0.7% to 81,180 yuan ($11,254.84) per metric ton at the midday break. This decline mirrored an aggregated 0.8% decrease on the London Metal Exchange, which operated while Chinese markets were closed for a holiday last week.

Commodities including SHFE zinc, tin, aluminium, lead, and nickel also experienced mixed movements, with zinc dipping by 0.2% to 23,330 yuan, tin dropping by 0.6% to 259,820 yuan, aluminium rising by 0.7% to 20,745 yuan, lead advancing by 1.4% to 17,575 yuan, and nickel increasing by 0.4% to 144,590 yuan.

Dollar index rebounds
The dollar index rebounded, following a three-week low in the previous session. A stronger dollar renders greenback-priced metals more expensive for holders of other currencies, thereby affecting demand dynamics in the market.

Smelters’ production cuts unlikely
While copper prices have seen some support from potential cuts in smelters’ output due to limited mine supply, data has not yet reflected significant reductions. Smelters with long-term raw material supply contracts are less inclined to cut production promptly.

According to a report by Huatai Futures, the smelting profit of long-term orders remains above 1,700 yuan a ton, potentially limiting the willingness of companies with long-term orders to actively reduce production.

Also read: Copper Approaches $10,000 per Ton, Attracts More Investors 

Despite the ongoing challenges in the Chinese real estate sector, steady demand from the power, electric vehicles, and home appliances sectors has contributed to a relatively stable end-user demand for copper, as highlighted by analysts at Huatai.

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