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Copper futures plunged to $4.3 per pound, marking a three-month low in response to President Xi Jinping’s recent speech following the CCP’s Third Plenum.

Xi’s speech, which lacked explicit references to stimulus measures aimed at bolstering domestic consumption, has sparked unease within China’s industrial sector, a pivotal consumer of this base metal.

Despite a decline in China’s NBS manufacturing Purchasing Managers’ Index (PMI) for consecutive months, copper prices continued their downward trajectory throughout June.

This economic slowdown has prompted Chinese smelters and manufacturers to pivot towards boosting exports, evidenced by a staggering 187% annual surge in copper exports.

Trade barriers loom large, while inventories rise

Adding to the industry’s woes are potential trade restrictions from the United States and Europe, casting a shadow over global copper trade dynamics.

Moreover, burgeoning copper inventories within Chinese warehouses have kept the Yangshan premium near zero, underscoring the sector’s current challenges.

Market observers are closely monitoring developments in China’s industrial policies and global trade relations, anticipating their profound impact on copper prices and the broader base metal market.

Uncertainty looms over China’s forthcoming stimulus initiatives and their potential impact on copper demand. With no concrete measures announced post-Xi’s speech, concerns mount over prolonged economic stagnation in key sectors like manufacturing, crucial for copper consumption.

However, Chinese refined copper production rose around 4% in June from the previous moth to 1.13 million tons, according to data released Wednesday, after an increase in prices of by-product sulfuric acid mitigated refining losses. But, the absence of clear signals promoting domestic consumption heightens fears of a slowdown that could significantly dampen copper market prospects.

Investors are adopting a cautious stance amidst these uncertainties, wary of the implications for market stability and investment strategies.

China’s economic policies hold substantial sway over global commodity markets, underscoring the interconnectedness and potential ripple effects across international borders.

As stakeholders await clearer economic directives from China, the outlook for copper prices remains uncertain, contingent upon the country’s strategic economic maneuvers in the coming months.

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