Copper price snaps thee-day rebound even as China imported more metals in August

• Copper price refresh intraday low to print the first daily loss in four.
• China’s copper imports jumped 26% YoY in August.
• Recession woes, hawkish Fed bets could be linked to the bear’s return.

Copper price drops around 1.5% intraday while marking the biggest daily fall the week during early Wednesday in Europe. In doing so, the red metal also snaps the previous three-day rebound from the six-week low.

That said, three-month copper prices on the London Metal Exchange (LME) closed at $7,801.50 a tonne on the last trading day of August, up 8.5% from a 20-month low hit on July 15 but still down 19.7% from the beginning of this year, reported Reuters.

While tracing the reasons, fears of economic slowdown in the largest customer China, as well as across the globe, gain major attention. Also exerting downside pressure on the metal prices are the increasing market bets over the Fed’s aggression. On the contrary, a jump in China’s imports of copper should have favored the metal prices but could not.

“China imported 26% more copper in August than a year earlier, customs data on Wednesday showed, as lowered prices and stocks amid power rationing enhanced the appetite for foreign supply,” said Reuters. The news also mentioned that the unwrought copper and copper product imports into China - including anode, refined, alloy and semi-finished copper products - totaled 498,188.60 tonnes in August. That compared with the year-earlier volume of 394,017.10 tonnes, a two-year low.

It should be noted that the decline in the warehouse stocks also fails to please copper buyers. “Shanghai Futures Exchange copper warehouse stocks dropped to a seven-month low of 31,205 tonnes on August 19,” reported Reuters.

On a different page, the US Treasury yields rally to a fresh multi-day high to propel the US Dollar Index (DXY) towards renewing the two-decade top. The same joins hawkish Fed bets to weigh on the market sentiment and push USD/JPY to the fresh high in 24 years, as well as the USD/CNH towards the key 7.000 threshold.

US ISM Services PMI rose to 56.9 versus 55.1 market forecast and 56.7 prior. However, the S&P Global Composite PMI and Services PMI eased to 44.6 and 43.7 respectively versus 45.0 and 44.1 initial forecasts in that order. Even so, the US Dollar Index (DXY) rose after the release and refreshed a 20-year high. It should be noted that the CME’s FedWatch Tool signals 72.0% chance of 50 basis points (bps) Fed rate hike in September versus 57% one-day ago.

With this, the commodities hold lower grounds while the US stock futures and the Asia-Pacific equities print losses at the latest.

Moving on, the monthly prints of the US trade balance and Fed Beige Book updates could entertain the commodity traders. However, major attention will be given to the various Fed speakers scheduled for public appearances in the next two days, including Fed Chairman Jerome Powell.