Copper hits New 3-Month High, China’s Imports Fall
China’s Imports Fall
On the 23rd of February 2023, copper prices increased by 3.3% rising to $10,747 per tonne, their highest in three months. This rise was sparked by China’s falling imports of refined copper in January 2023, dropping by 11.6% year-on-year to 435,010 tonnes.
The decrease in imports is likely due to a slowdown in demand for copper from the real estate and construction sectors in China, its two major consumers, as a result of the country’s economic downturn and the ongoing COVID-19 pandemic, particularly during January when the country still enforced its zero-Covid policy.
Uncertain Future
Despite the recent surge in prices and fall in imports, the future of copper prices remains uncertain. The ongoing war in Ukraine and geopolitical tensions between the US and China continue to weigh on the global economy, with the International Monetary Fund recently cutting its growth forecast for China this year.
The US Federal Reserve is also expected to continue raising interest rates this year in an effort to combat inflation, which could further strengthen the US dollar and make commodities like copper more expensive for buyers holding other currencies.
Analysts’ Views
Analysts are divided on the future direction of copper prices. Some believe that the recent rally is a sign of a longer-term bull market, while others believe that the market is overbought and due for a correction.
According to Goldman Sachs, the copper market is expected to remain in deficit this year, which could support prices, however, it also warned that the market is “susceptible to a correction” if the global economy worsens.
Conclusion
The recent rise in copper prices and fall in China’s imports have raised questions about the future of the copper market. While some analysts believe that the market is in a bull cycle, others believe that a correction is due.
The ongoing war in Ukraine, geopolitical tensions, and rising interest rates are all factors that could weigh on the copper market in the coming months. Investors should carefully consider these factors before making any investment decisions.
