Copper price renews multi-day low on grim outlook for demand, pre-NFP jitters

• Copper price drops for the sixth consecutive day to revisit the late July levels on COMEX.
• China’s stimulus fails to renew optimism as covid woes, recession fears loom.
• Moody’s cites concerns over metal basket, cuts 12-month price outlook.

Copper price braces for a big weekly fall as the demand outlook worsens for the red metal, mainly due to concerns relating to China and global central banks. Also exerting downside pressure on the metal could be the market’s anxiety ahead of the key US jobs report for August.

That said, copper futures on COMEX print a six-day downtrend as bears poke the lowest levels since July 27, down 0.50% around 3.3930 heading into Friday’s European session. Also, the most-traded October tin contract on the Shanghai Futures Exchange (SFE) has plunged 13% so far this week to 172,510 yuan ($24,994.20) a tonne, hitting the lowest since June 23, 2021, on Friday, per Reuters. Furthermore, the LME copper dropped 0.4% to $7,563.50 a tonne by the press time.

Chinese authorities show readiness to adopt various monetary policy tools, other than the rate cuts, to renew market optimism amid the covid woes. The policymakers also appear okay with giving special attention to the aiming real-estate sector.

Even so, the fresh lockdown in the southwestern Chinese metropolis of Chengdu follows activity restrictions in parts of the southern city of Guangzhou and the tech hub of Shenzhen to challenge the metal’s outlook.

Further, the Sino-American tussles, recently over Taiwan, join downbeat China PMIs for August to weigh on the metal prices.

It should be noted that the recession fears signaled by the US Treasury yields and the hawkish Fed bets are extra burdens on copper prices.

That said, the US 10-year Treasury yields seesaw around the highest levels since late June, near 3.26% by the press time, while the two-year US bond coupons follow the trend by teasing the 15-year high near 3.51%. With this, the yield curve inversion hints at the recession fears and the traders’ rush towards bonds. That said, the CME’s FedWatch Tool signals 74% chance of the Fed’s 75 basis points of a rate hike in September versus nearly 69% previously.

Elsewhere, global rating giant Moody’s trimmed its annual price forecasts for the basket of the metal and mining commodities the previous day, which in turn dragged the copper prices.

Looking forward, the US Nonfarm Payrolls (NFP) and Unemployment Rate for August, expected 300K and 3.5% versus 528K and 3.5% respective priors, will be important for fresh directions amid recent counter-trend sentiment.