Base Metals Weekly Round-Up: Copper Set for Weekly Loss

Despite edging up on Friday (September 20), copper was on track for a weekly loss due to worries over demand in top consumer China.

Copper prices hit their highest point this week on Monday (September 16), trading at US$5,875 per tonne, but slipped after weak Chinese data increased concerns about demand.

“(China’s industrial production data) was definitely weaker than expected. Copper has rallied pretty decently over the past couple weeks, but this was a little reminder that the underlying fundamentals are still questionable,” said Colin Hamilton, director of commodities research at BMO Capital (LSE:BCI).

On Tuesday (September 17), copper fell to US$5,761, and it was under even more pressure on Wednesday (September 18) ahead of the US Federal Reserve meeting. The central bank cut interest rates by 25 basis points for the second time since the 2008 financial crisis.

“A rate cut would definitely push up prices (but only) in the very short term,” CRU Group copper analyst He Tianyu told Reuters ahead of the meeting. Tianyu added that prices would then be likely to fall back because a rate cut had been widely expected and demand for copper remains weak.

Looking over to nickel, prices performed with volatility this week. Starting at US$17,290 per tonne on Monday, prices plummeted to US$16,975 on Tuesday to end the week trading at US$17,725. Nickel jumped on the back of supply purchases from stainless steel producers ahead of a Chinese holiday.

“Across most sectors, in the week before the Golden Week holiday, you’ll invariably see a bit of raw material restocking, so we have elements of that in nickel alongside the broader potential restocking as we head into the (Indonesia) ban application,” said Deutsche Bank (NYSE:DB) analyst Nicholas Snowdon.

Zinc was trending down this week, reaching its highest point on Monday at US$2,388.50 per tonne after Newmont Goldcorp (TSX:NGT,NYSE:NEM) suspended operations at its Peñasquito mine in Mexico. The metal gave up its gains during the week to end at US$2,308.

Lead’s fate this week was similar, with the metal hitting a six month peak on Monday at US$2,221 per tonne, but ending the week at US$2,114.

Meanwhile, iron ore prices had lost almost 6 percent by the end of the week ahead of the Chinese holiday. Iron ore was trading at US$91.99 per tonne on Friday.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.