Dollar Strength and Economic Data Push Copper to $4.0410/lb

The copper market faced a harsh reality check on December 20, 2024. Prices retreated as economic data and demand concerns weighed heavily on traders’ minds.

The COMEX copper futures for December delivery settled at $4.0410 per pound, marking a 2.60% weekly decline. On the London Metal Exchange, the 3-month contract closed at $8,885 per tonne.

This represented a 1.77% drop from the previous session. Trading volume reached 19,000 lots, indicating active market participation. Meanwhile, in Shanghai, the February delivery contract ended at 73,540 yuan per tonne.

Several factors contributed to copper‘s downward spiral. A strengthening U.S. dollar put pressure on dollar-denominated commodities. Surprisingly strong U.S. economic data reinforced the greenback’s position.

Central bank officials’ cautious remarks about monetary easing added to concerns about potential economic slowdowns. China, the world’s largest copper consumer, continued to cast a shadow over the market.

Recent data revealed slowing retail sales growth and persistent weakness in the property sector. These factors dampened enthusiasm for the red metal.

Copper Market Update

Ole Hansen from Saxo Bank offered insight into the market dynamics. He noted that the month-long rally was losing steam due to softening short-term demand in China.

Hansen also pointed out the risk of long liquidation from hedge funds with substantial positions. Technical indicators painted a bearish picture. Moving averages signaled a strong sell, with 12 sell indicators against zero buy indicators.

The Relative Strength Index stood at 46.484, suggesting a neutral stance. Supply-side data showed mixed signals. LME copper stocks remained steady at 272,325 tonnes.

Shanghai inventories decreased by 4,400 tonnes to 98,700 tonnes, indicating continued destocking but at a slower pace. Despite the short-term headwinds, long-term fundamentals for copper remain supportive.

Anticipated demand from electric vehicles, grid infrastructure, and AI data centers underpins a positive outlook. However, production from existing miners is expected to decline in the coming years.

The copper market’s story is one of conflicting forces. Short-term economic concerns clash with long-term demand projections. Traders must navigate this complex landscape, balancing immediate pressures against future potential.

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