Copper traders are taking a wait-and-see approach ahead of Friday’s speech from the Federal Reserve chairman. The red metal did, however, get some lift from China’s continued commitment to buy European government bonds as a means to stabilize the Eurozone.
Australia’s central bank expects the mining industry to wind down from its high in about a year’s time, and companies such as BHP Billiton have already postponed major copper project investments. But with supplies expected to tighten further, rival Rio Tinto is prepared to continue forging ahead with developing one of the world’s biggest copper mines. Who’s right?
Despite lower copper prices, the black market trade in stolen copper is thriving, and has led politicians in the US and the UK to crack down on the practice. The scrap copper market is also being supported by legitimate copper recycling.
China’s industrial output has reached a three-year low. That is seen by some copper traders as a blessing as it may push Beijing to once again take steps to stimulate economic growth, which in turn should drive up copper demand.
The European Central Bank’s decision to keep interest rates unchanged and not provide new stimulus measures has put a damper on copper demand, as has the Federal Reserve’s decision not to pursue further quantitative easing, at least for now.