Copper prints five-day downtrend as recession fears supersede China’s production fall

• Copper price holds lower ground near the one-month low flashed the previous day.
• Recently downbeat economic data, China’s covid conditions join hawkish central bankers to weigh on prices.
• Chile reports 8.6% YoY fall in copper production during July.
• Risk catalysts, US data are crucial for fresh impulse.

Copper price holds its place on the bear’s radar as it drops for the fifth consecutive day, and stays pressured around the one-month low heading into Thursday’s European session. The red metal’s latest weakness could be linked to the downbeat statistics from the global majors, as well as coronavirus at the world’s biggest metal consumer China. In doing so, the quote ignores a reduction in the output at one of the key producers of the commodity, namely Chile.

While portraying the moves, copper futures on the COMEX dropped more than 1.0% to $3.4790 by the press time. That said, a three-month copper on the London Metal Exchange (LME) was down 0.8% at $7,742.50 a tonne, as of 02:13 GMT, extending losses from the previous session, per Reuters. Above all, the October contract of the metal on the Shanghai Futures Exchange drops nearly 1.6%.

That said, China’s Caixin Manufacturing PMI marked the lowest prints in three months while suggesting a contraction in activities with a 49.5 figure, versus 50.2 expected and 50.4 prior. In doing so, the private manufacturing gauge tracks the official NBS PMI and highlights grim conditions at the world’s largest industrial player. On the same line was the US ADP Employment Change that rose by 132K versus 288K expected and 270K prior.

The chatters surrounding another ship blocking the moves in the Suez Canal, before the latest refloat, joined pessimism over China’s covid conditions and tussles with the US over Taiwan appear to weigh on the market sentiment of late. Recently, Taiwan's President Tsai Ing-Wen mentioned that Taiwan wants to expand its semiconductor industry collaboration with the US.

Elsewhere, hawkish Fed bets are an extra burden on the industrial metal. As per the CME’s FedWatch Tool, there is a 74.0% chance of a 75 basis points Fed rate hike in September, versus 73.0% the previous day.

Alternatively, impending details of China’s stimulus and an 8.6% YoY drop in the output of the world’s biggest copper producer Chile, during July, seem to challenge the copper bears.

While the market fears are negative for the metal prices, coupled with the hopes of receding demand and a firmer US dollar, headlines surrounding and the ISM Manufacturing PMI for August, expected 52.8 versus 52.0 prior, could entertain traders ahead of Friday’s US Nonfarm Payrolls (NFP).