Copper Prices Are Nearing a Nine-Month Low, Analysts State that the Downside Risks Are Limited

铜价接近九个月低点,分析师称下行风险有限
Published on: Jan 2, 2025
Author: Amy Liu

On the first trading day of the New Year, copper prices initially rose over 1% on the London Metal Exchange; however, they reduced gains as the Chinese stock market recorded its worst New Year opening since 2016. European stock markets also opened lower. Copper prices stabilized at near nine-month lows on the London Metal Exchange as investors considered whether China would implement more stimulus measures in 2025.

The selling pressure originated from December’s manufacturing survey results, which were weaker than expected. Looking ahead, the market is focused on whether China’s sluggish real estate sector can recover, as it is a crucial pillar of copper demand. Additionally, trade tensions from former President Trump’s administration may also have an impact. Officials have promised to stimulate growth through increased public borrowing and spending, along with monetary easing, in 2025.

The Chinese government had previously announced at the end of December 2024 that it would reduce import tariffs on ethane and certain recycled copper and aluminum raw materials starting next year. The Ministry of Finance stated that, effective January 1, an adjustment of various import tariff categories aims to increase high-quality product imports, expand domestic demand, and promote a higher level of openness to the outside world. Provisional import tariffs lower than the most-favored-nation rate will be applied to 935 products, including the reduced tariffs on ethane and certain recycled copper and aluminum raw materials to advance green, low-carbon development.

Ewa Manthey, a commodity strategist at ING, said via email, “Investors are waiting to see whether and when China’s support measures will enter the metals market in the form of increased demand. Trump’s tariffs may also prompt China to implement larger-scale stimulus measures, which could curb the downside risks for copper prices.”

The London Metal Exchange’s six-metal LMEX index ended 2024 with a modest gain of about 4%, but the slowdown in Chinese metal demand was offset by supply pressures resulting from falling inventories and shortages in mine supplies.

As of 11:13 a.m. local time, copper prices rose 0.1% to $8,779 per ton. Zinc prices fell 1% to $2,948.50 per ton, and nickel prices decreased by 0.8%.

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