Copper Prices Decline Amid Demand Concerns and Stronger Dollar

LONDON: Copper prices experienced a decline on Friday, influenced by a strengthening dollar and uncertainty surrounding demand, which overshadowed the optimism that the U.S. and China were attempting to de-escalate their trade dispute.

Benchmark copper on the London Metal Exchange (LME) traded at $9,365 a metric ton, a decrease of 0.3% in official trading. Earlier in the week, the metal reached $9,481.50, marking its highest point since April 3, and was on track for a weekly increase.

Recent news indicated that China has approved certain exemptions on U.S. imports from its 125% tariffs and is requesting businesses to specify products that could qualify.

Earlier in the week, the U.S. Treasury Secretary commented that elevated tariffs between the two nations were not sustainable.

“The trajectory of this trade war is unclear. Negotiations are underway, but they are complex,” stated Nitesh Shah, a commodity strategist at WisdomTree.

“The extent of demand destruction resulting from the trade war remains uncertain in the short term. Therefore, the current downturn is not surprising.”

Copper inventories in warehouses monitored by the SHFE experienced a significant decrease of 32% over the week, the exchange reported on Friday.

Impact of Tariff Uncertainty on Copper Gains

According to sources, the sharp decline was caused by consumers utilizing stocks acquired weeks prior when copper prices decreased significantly following the imposition of new tariffs.

Reports on Thursday indicated that significant declines in SHFE stocks were generating concerns about a potential short squeeze.

The metals market was impacted by a surge in the dollar, prompted by indications of easing tariff tensions. This increase makes dollar-denominated commodities more costly for purchasers using other currencies.

In other metals trading, aluminium decreased by 0.2% to $2,443 a ton, zinc dropped by 1.4% to $2,650, lead increased by 0.1% to $1,962, nickel declined by 0.7% at $15,710, and tin increased by 1.4% to $32,195.