AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
The drop in copper prices below $10,000 per ton is attributed to traders factoring in the sharp increase in global inventories, along with softer-than-expected US job data, which have strengthened bets on the Fed’s ability to cut interest rates this year.
Inventory levels at the Shanghai Futures Exchange have climbed to the highest levels seen since 2020, and over the past few weeks, there have been continuous small-scale inflows of inventories tracked by the London Metal Exchange at Asian warehouses. Inventories typically decline at this time of year, and after copper prices surged to historic highs of over $11,100 per ton last month, the spike in inventories has put pressure on copper prices.
Simultaneously, job openings in the US for April dropped to the lowest level in over three years, aligning with a gradual slowdown in the labor market. The Job Openings and Labor Turnover Survey released by the US Bureau of Labor Statistics on Tuesday, June 4, showed that job openings in the US for April decreased from 8.36 million the previous month to 8.06 million.
Yield on government bonds has decreased, and the forward market currently anticipates a faster pace of interest rate cuts this year. This has helped copper regain some of its early losses.
Since the beginning of the year, base metals have seen significant increases due to hopes for interest rate cuts in the US and signs of the Chinese economy potentially recovering from the post-pandemic slump. Concurrently, the continuous rise in exchange inventories proves that buyers currently have sufficient supply, which is a disadvantage for bulls predicting another rapid increase in copper prices.
Carsten Menke, the head of next-generation research at Julius Baer, stated in an email, “It appears that the supply in the copper market is much more abundant than some traders had hoped for. Therefore, in our view, the likelihood of a rapid turnaround in copper prices is slim, and we expect the market to consolidate over the summer months.”
As of 3:26 PM local time, copper prices on the London Metal Exchange fell by 1.7% to $9,968.50 per ton. Shares of copper miners also experienced declines, with Freeport-McMoRan Inc. seeing a drop of up to 4.8%. Apart from aluminum’s rise, prices of other major base metals on the London Metal Exchange have fallen.
