European Copper Price Pressured By Slipping Demand Outlook

Germany: In the European market, Copper prices witnessed a downward trend this Monday. As per market players, Copper prices plunged to a two-month low due to several factors such as rising fears of a global shutdown, a weakening demand outlook, a stronger US dollar, and rising inventories in London Metal Exchange (LME) registered warehouses, sparking a sell-off. According to manufacturers, European manufacturing activity fell in September due to ongoing cost pressures. Manufacturers expect lower demand and possibly lower prices until the end of this year.

Our sources indicate that, as a result of Russia's invasion of Ukraine, global growth is slowing faster than anticipated and that major economies are at risk of recession due to the energy and inflation crises. Copper for December delivery fell 0.9% from Friday's settlement price, around USD 7,485/MT. Furthermore, Copper stocks in LME warehouses have increased by more than 28% since September, hovering around 135,800 tonnes, while canceled warrants (an indicator of physical demand) have fallen to less than 7%, down from 50% on August 26.

Meanwhile, traders stated that the cash premium over the three-month copper contract increased due to market participants squaring their short positions. Production cuts in Europe exacerbated supply concerns due to a record high energy price. However, players now claim that slowing growth will keep copper consumption and costs under pressure. Market participants are more concerned about the European winter, which will be another critical tipping point. However, barring a harsh winter, things in Europe will not be as sinister as expected, thanks to impressive energy planning, preparation, and conservation.

According to ChemAnalyst, aggressive global monetary tightening has fueled fears of a global recession and dampened demand for Copper. Copper prices are falling due to weakening investor sentiment and falling demand. As a ripple effect, Copper prices are anticipated to continue their downward trend in the upcoming weeks.