Copper Futures Trend

Copper Cable NEW YORK, Dec. 22- Copper futures on the Chicago Mercantile Exchange (COMEX) fell Thursday, failing to extend the rally of the previous three sessions, mainly because of concerns that strong U.S. economic data will prompt the Federal Reserve to take more aggressive measures to curb inflation, which will lead to a slowdown in U.S. economic growth.

The dollar strengthened and stocks fell on Thursday, reflecting the prevailing risk aversion among investors.

By the close of trading, copper futures were down anywhere from 4.9 cents to 5.45 cents, with the most actively traded March 2023 copper futures closing at $3.757 per pound, down 5.3 cents or 1.39% from the previous session.

March copper futures were trading in a range of $3.752 to $3.8435.

The number of Americans filing first-time jobless claims rose less than expected last week, indicating that the U.S. labor market remains tight, while the U.S. economy rebounded faster than previously estimated in the third quarter, the U.S. announced Thursday.

The Labor Department said Thursday that the number of initial claims for unemployment benefits rose by 2,000 to a seasonally adjusted 216,000 in the week ended Dec. 17, below economists' forecasts of 222,000. In addition, the U.S. government estimated Thursday that gross domestic product grew 3.2 percent year-over-year in the third quarter, up from 2.9 percent reported last month.

These data raise concerns that the Fed will be more aggressive in raising interest rates. Last week the Fed raised rates by 50 basis points, downsizing from the previous four consecutive 75-basis-point rate hikes, but Fed Chairman Jerome Powell warned that recent signs of inflation are not enough to convince the Fed that the battle against inflation has been won. The Fed expects to continue raising rates to more than 5 percent in 2023, which would be a level of high interest rates not seen since the sharp economic downturn in 2007.

Thursday's rise in the ICE dollar index also meant that dollar-priced copper was more expensive for buyers holding other currencies.

The epidemic situation in China, the top copper consumer, is a concern. Copper is commonly used as an indicator of the health of the global economy and is widely used in the manufacturing and construction sectors. China accounts for about half of global copper consumption.

Copper futures are up 0.59% so far this month and still down 15.79% so far this year, 14.49% lower than a year ago and 23.78% lower than the record high set in early March, mainly because the Federal Reserve opened the interest rate hike cycle from March, raising borrowing costs and increasing the risk of recession in the U.S. and globally.

By way of comparison, copper futures recorded annual gains of 25% for the second consecutive year in 2020 and 2021, supported by the potential for additional copper demand growth driven by the global green economy transition and electrification, while copper mine supply is at risk of disruption.

From the external market, January copper futures, the most actively traded on the Shanghai Futures Exchange, rose 260 yuan to close at 65,940 yuan per ton on Thursday. February bonded copper on the Shanghai International Energy Exchange (INE) rose 370 yuan to close at 58,930 yuan per tonne.

On Thursday, copper futures volume was 50,761 lots, compared with 19,450 lots in the previous session; short interest volume was 157,028 lots, compared with 156,204 lots in the previous session.

　　(Article source: Business News, 100ppi.com)