Copper Prices Fluctuate Amid Weaker US Economic Data and Reduced Rate-Hike Expectations

Copper prices rose initially and then fell this week, with the price center lifting WoW. The US July nonfarm payrolls unexpectedly dropped by 23,000, significantly weaker than expected, but the CPI and core CPI declined to 3.4% YoY and 2.5%, respectively, easing concerns about inflation exceeding expectations.

The slowdown in US July PPI growth exceeded expectations, leading traders to reduce bets on a September US Fed rate hike, with the latest probability at 32%. This reduction in rate-hike expectations caused LME copper to bottom out.

Domestically, the People's Bank of China announced it would strengthen counter-cyclical adjustment and introduce incremental policies to expand domestic demand, providing some support to market sentiment. Geopolitically, US-Iran negotiations and arrangements for navigation through the Strait of Hormuz continued to swing back and forth, with all parties sending different signals on ceasefire deadlines, safe shipping routes, and control of the strait.

As a result, copper prices fluctuated at high levels. LME copper touched a weekly high of $14,262/mt but then fell to a low of $13,955/mt, down $307/mt from the high, a decline of about 2.15%. The most-traded SHFE copper contract touched a low of 107,130 yuan/mt and rose to a high of 108,740 yuan/mt, up 1,610 yuan/mt from the low, a gain of about 1.50%.