Prices of the red metal fell today into the $7,000 per ton area for the first time since November 2020. Let's remember that just a little over four months ago COPPER cost the most in history, when concerns about the availability of the metal amid the war in Ukraine were the main factor creating demand. Today, the situation is becoming even more convoluted, with the difference that the specter of a global recession is looming over the economy, and fears that China's recovery from a Covid-19 slump will not go as expected (China accounts for half of global copper consumption).
Developers in China are struggling to make new investments, as citizens are defaulting on their loans, negatively impacting short-term demand (despite possible stimulus from the government).
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Open account Try demo Download mobile app Download mobile appToday, weak data from the Chinese economy hung over the commodity market. China's GDP contracted by 2.6% k/k in the second quarter of 2022 (eyes -1.5% k/k). On an annualized basis, it grew 0.4% y/y (forecast: 1.0% y/y). Goldman Sachs, after today's GDP reading, lowered its forecast for China's economic growth to 3.3% in 2022 from an earlier 4%. The bank's analysts pointed to possible problems in the recovery of economic activity amid the rising number of Covid's cases in July.
A chart we posted (Commodity Wrap 12.07.2022) of China's Credit Impulse shifted by 18 months indicated that there may not be more demand for the metal in the near term, particularly since we also have major concerns about the crisis. Source: Bloomberg, XTB
COPPER prices break through the psychological barrier of $7,000 per ton. Source: xStation 5
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