Copper prints four-day downtrend amid China-linked demand fears

• Copper drops for the fourth consecutive day after rising to one-month high.
• US-China tension over Taiwan, fears of economic slowdown due to the central bank’s aggression weigh on prices.
• Resumption of multiple manufacturing facilities in China appears to propel supply.
• China’s State Grid’s planned investment, recently softer US dollar limit downside move.

Copper prices remain pressured for the fourth consecutive day heading into Thursday’s European session. The metal’s latest weakness could be linked to the sluggish sentiment in the market, as well as fears of lesser demand for industrial metal going forward.

That said, prices of a three-month copper contract on the London Metal Exchange (LME) stay on the back foot below $7,700 while the most-traded September copper contract on the Shanghai Futures Exchange (SFE) fell 1.2% to 59,310 yuan ($8,781.20) a tonne by the press time.

It’s worth noting that the quote rose to the highest in one month on Monday before reversing from $3.5957, per the most active COMEX Copper contract. The pullback in prices could be linked to the market’s risk aversion wave amid the US-China tussles over US House Speaker Nancy Pelosi’s Taiwan visit, as well as the fears of an economic slowdown given the most central banks’ rush for higher rates.

It should be noted that the fears of more supplies due to major copper producing facilities’ restart in China and Chile also weigh on the prices. On the contrary, Reuters hinted at higher copper demand from China as it said, “In China, the State Grid plans to invest more than 150 billion yuan ($22 billion) in the second half of 2022 in ultra-high voltage power transmission lines, expected to drive demand for raw materials including aluminum.”

Elsewhere, China’s actions in the Taiwan Strait appear to weigh on the market sentiment and weigh copper prices. Recently, Taiwan’s Foreign Ministry crossed wires, via Reuters, while saying that China is attempting to alter the status quo in the Taiwan Strait. However, Bloomberg’s news suggests the US Democratic Party members’ dissent to the US-Taiwan ties appears to tame the fears of the Sino-Americans due to US House Speaker Pelosi’s Taiwan visit.

Moving on, the US Good and Services Trade Balance for June, expected $-80.1B versus $-85.5B prior, as well as the weekly Initial Jobless Claims, expected 259K versus 256K prior, will decorate the calendar. Also important to watch will be the Sino-American tension over Taiwan for clear directions ahead of Friday’s US NFP.