Copper prices dropped to a three-week low on Tuesday, driven by confusion regarding the scale and specifics of China’s economic stimulus measures and geopolitical tensions.
On the London Metal Exchange (LME), three-month copper fell by 1.1%, reaching $9,555 per metric ton, the lowest level since September 24.
Last month, copper prices surged after China hinted at a large-scale economic recovery plan. However, the lack of detailed information since then has left investors uncertain. On Saturday, China promised to “significantly increase” debt, but offered no specifics on the amount or timeline.
LME copper saw a 14% rally between September 4 and the end of the month, hitting a four-month high, but has since dropped by 6%.
“Investors are cautious, waiting for clearer details on China’s growth policies,” said Tom Price, head of commodities strategy at Panmure Liberum. He added that while U.S. rate policy is becoming clearer, global uncertainty remains high, citing the upcoming U.S. election, conflicts in the Middle East and Ukraine, and seasonal factors like winter destocking.
Price expects LME copper to average $9,000 per metric ton in the fourth quarter.
The most-traded November copper contract on the Shanghai Futures Exchange also declined, falling 1.3% to 76,520 yuan ($10,747.34) per ton.
Recent disappointing economic data from China, including lower-than-expected trade and lending figures, as well as deeper producer price deflation, has added to investor concerns.
Meanwhile, copper received some support from news that Freeport Indonesia halted copper cathode production at its Manyar smelter due to a fire.
Other base metals also saw declines: LME aluminum fell 1.8% to $2,548.50 a ton, nickel dropped 1.8% to $17,345, zinc slipped 2.5% to $3,007, lead lost 1% to $2,043.50, and tin decreased by 1.5% to $31,955.
