Copper drops for the third consecutive day as recession fears escalate

• Copper remains on the back foot around weekly low, prints three-day downtrend.
• China’s covid conditions, geopolitical headlines raise concerns over global economic downturn.
• Improvement in supplies adds strength to the bearish bias.
• US GDP, China’s covid updates and risk catalysts are crucial for clear directions.

Prices of copper futures on COMEX take offers around $4.23 as sellers keep reins for the third consecutive day amid the market’s fears of global recession and a slump in the industrial demand for the red metal.

Reuters describe three-month LME copper prices as 0.1% down at $9,365 a tonne by 03:51 GMT whereas the most-traded July copper contract on the Shanghai bourse ended the morning trade 0.2% lower at 71,280 yuan ($10,614.25) a tone.

“Years of under-investment in the mining of metals essential to the energy transition, supply shocks, and high energy prices will continue to drive commodity prices higher, Eurasian Resources Group Chief Executive Benedikt Sobotka said,” per Reuters.  The news also highlights increasing odds of an end to the protest that has halted operations at MMG Ltd's Las Bambas copper mine in Peru also weighing on prices.

Elsewhere, fears emanating from the Ukraine-Russia crisis and China’s covid conditions, as well as the fresh fears of the Sino-American tussles, weigh on the market sentiment and copper prices.

While portraying the mood, the S&P 500 Futures print mild losses around 3,965 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 0.5 basis points (bps) to 2.75% at the latest.

Looking forward, copper traders will keep their eyes on the second readings of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%, to determine short-term prices. However, major attention will be given to the risk catalysts surrounding inflation, growth and covid.

Technical analysis

Unless crossing a short-term hurdle surrounding $4.45, COMEX Copper prices are on the way to $4.00.