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Iron Ore:

• Prices for 63.5% iron ore cargos in Tianjin climb above $111 per ton, recovering from a one-month low, driven by hopes of stronger demand.
• China’s hot metal production reached its highest level since October 2020, averaging 2.5 million tons per day, indicating steel mills are returning to full capacity.
• Iron ore imports in China surged by 7.4% annually in June, offsetting the decline in goods demand in other sectors and boosting market sentiment.
• Concerns over China’s debt-ridden property sector continue to impact commodity prices, with steel rebar futures facing downward pressure.

Copper:

• Copper futures retreat to $3.8 per pound from a two-month high as weaker-than-expected Chinese data hampers short-term resource demand.
• China’s GDP growth in the second quarter fell below market expectations at 6.3%, while industrial production surpassed estimates.
• Beijing signals limited stimulus measures, prioritizing growth in the service sector over manufacturing and construction.
• Declining global copper supply, including a 14% annual drop in Chilean output, supports prices amid the metal’s crucial role in the transition to sustainable energy sources.

The market sentiment was lifted by the lower-than-expected inflation reading from the prior week, while the possibility of a easing in the current tightening cycle of central banks put pressure on the dollar. This supports the commodities sector as well. However, the market is indicating another 25 bps hike to combat inflation, as central banks appear to maintain a hawkish stance. This has resulted in potential long liquidations across various markets, although market participants may still plan to add to core long positions during the retracement.

From a technical perspective, Copper faced selling pressure around the developing Year’s VWAP level. This could potentially drive the price lower towards the swing lows, where the mentioned core buyers of this crucial base metal might emerge. The lower value extreme could still serve as a level of support for buyers in the event of a possible auction lower.

In the medium- to long-term perspectives, the weakening dollar, influenced by the potential dovish tone, could serve as a bullish factor for the commodities landscape.

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