The recent surge in new crown infections coupled with the Chinese New Year holiday will curb demand for industrial metals.

cu xlpe pvc cableNEW YORK, Dec. 29: Copper futures on the Chicago Mercantile Exchange (COMEX) fell Thursday, the second straight day of lower closes.

By the close of trading, copper futures were down anywhere from 1.8 cents to 2.3 cents, with the most actively traded March 2023 copper futures closing at $3.824 per pound, down 1.85 cents or 0.48 percent from the previous session, the largest one-day decline since Dec. 22, 2022.

March copper futures are trading in a range of $3.8075 to $3.852.

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.

The recent surge in new crown infections in China, coupled with the Chinese New Year house holiday next month, will curb demand for the industrial metal.

The market is also watching the tax dispute between the Panamanian government and First Quantum Minerals. Panamanian officials and the miner have returned to the negotiating table, with both sides saying they want to reach an agreement on tax payments to avoid the closure of the copper mine. The Panama mine, owned by First Quantum Minerals, produced 331,000 metric tons of copper last year.

Copper futures, up 2.45 percent so far this month, are still down 14.23 percent so far this year, 12.85 percent below the same period last year and 22.40 percent below the all-time high set in early March, mainly because the Federal Reserve started a cycle of interest rate hikes from March, raising borrowing costs and increasing the risk of a U.S. and global recession.

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 external markets, February 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 44,029 lots, compared with 49,647 lots in the previous session; short interest volume was 160,835 lots, compared with 160,334 lots in the previous session.

(Article source: Business News)