Copper drops to new three-month low on weak demand, surging stockpiles

Copper futures extended last week’s plunge in London trading Monday, as China’s modest rate made little impact on concerns about demand in the world’s top commodities consumer.

Front-month London copper futures (HG1:COM) fell ~0.5% to $9,260/ton after sliding to as low as $9,233.50 even after the Chinese government announced surprise interest rate cuts in an effort to support the lackluster economy; the move followed a lack of short-term stimulus from a major Communist Party meeting last week.

In an indicator of continued demand weakness in China, refined copper exports more than doubled in June, topping a previous record set in 2012, which has helped push global inventories higher, with stockpiles at London Metal Exchange global warehouses more than doubling over the past two months to the highest since September 2021.

ETFs: (COPX), (CPER), (OTC:JJCTF)

Freeport-McMoRan (NYSE:FCX) shares have fallen for seven straight sessions; other potentially relevant stock tickers include (SCCO), (TECK), (BHP), (RIO), (VALE), (ERO), (OTCPK:CSCCF), (OTCPK:FQVLF), (OTCPK:GLCNF), (OTCPK:GLNCY), (OTCQX:AAUKF), (OTCQX:NGLOY)

Copper mining executives are seeing increasing signs of a shift to direct deals with cable manufacturers, car companies and other big buyers to secure supply at an affordable prices, Financial Times reported as part of an analysis this weekend.

“Ultimately those that will be utilizing the copper – whether that is for charging stations, grid buildout or vehicles – will start to get more interested in how they access this copper,” Teck Resources (TECK) CEO Jonathan Price told FT. “We will start to see more interest in direct linkages between the miners and those ultimate end users… we are starting to see and hear more of that.”