FX.co ★ Copper drops amid strong USD and reduced demand

According to the data from the London Metal Exchange (LME), global copper prices dropped to the low last seen in November 2022.

On October 3, the metal price slid below $8,000 a ton. Later, on October 6, three-month futures on copper were trading at $7,899 a ton. Analysts estimated that since the beginning of the year, the asset has lost 6%, while since early August, it has declined by 10%.

Such a dynamic could also be seen on the Comex exchange in the United States. The metal price decreased to $3.56 per pound, the lowest level since November 2022.

Analysts are sure that the fall is caused by low demand in China and tough monetary policy by the Federal Reserve. The current monetary policy is boosting the US dollar and leading to a decline in commodities. What is more, sour trading relations between the United States and China are affecting demand for copper and its price.

The initial estimates suggest that copper will hover near $8,000 a ton in the near future. However, in the fourth quarter of 2023, the metal may start recovering. At present, falling metal prices are being offset by the ruble slide. However, flexible export duties could not be very beneficial for copper producers.