Base metal prices had followed a downward trend in a few previous months. Copper prices increased for two reasons yesterday: less demand for dollars made it cheaper to buy from other countries; the additional supply risk in Peru has raised the ultimate demand and increased the prices. Spot and futures prices of base metals have shown recovery on significant exchanges, i.e., Shanghai Futures Exchange (SHFE), London Metal Exchange (LME), and Multi Commodity Exchange (MCX). Three months of copper prices have increased by 0.8% to $7,542/MT at LME and by 1.3% to
US$8,578.50/MT at SHFE. In March, copper prices were US$10,845, which still has a fall of 30%. LME Zinc prices have decreased by 0.23%, and aluminum prices have a fall by 2.71%.
Base metal prices remained fluctuating, and the reasons for the fall are less demand from China due to Covid and globally rising inflation, turning the central banks’ attention to raise the interest rates. Traders are looking for the decision of the Federal Reserve to increase the interest rate by 50 to 75 basis points. With the increase in interest rate, there may be less demand for metals, affecting future prices.
Stocks of base metals differentiate at LME Warehouse stock as Zinc stocks have piled up by 0.07%, and all other base metals stocks fall by 2% on 25th July 2022. SHFE nickel prices increased by 2.2%, and a fall of 0.7% in aluminum. A significant cut of up to 60% in copper production by MMG Ltd (Chinese mine) in response to a protest at its Las Bambas Mine in Peru will affect the copper prices and stocks.
Many NGOs have requested Elon Musk, CEO of Tesla Inc, not to invest in the nickel industry in Indonesia due to environmental hazards. It may result in a fall in supply. Supply Chain issues may solve as the Oil Corporation of Libya may increase its productivity from 860,000 million barrels per day (BPD) to 1.2-1.3 million BPD. But a rise in interest rate can affect the oil demand and product demand. Copper production decisions in China and nickel in Indonesia may increase the base metals prices. With time, things will become more apparent and decide where prices will move further.
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