Summary The unexpected rise in U.S. non-agricultural employment in May led to increased market concerns about the Federal Reserve's potential slowdown in its quantitative easing program. This uncertainty in stimulus policy quickly dampened the upward momentum of copper prices, which had been rising sharply earlier in the month. Meanwhile, weak Chinese economic data failed to provide any relief to the copper market, as both CPI and PPI figures fell, and trade growth dropped significantly, highlighting slower domestic economic performance.
Neglect frequently contributes to the fall in copper pricesThe U.S. non-farm payroll report for May came in higher than expected, sparking worries that the Fed might slow down its bond-buying program. As the outlook for monetary stimulus remains unclear, this development quickly curbed the bullish trend in copper prices. In addition, subsequent Chinese data showed signs of weakness, with falling CPI and PPI numbers, a sharp drop in trade growth, and lower-than-expected GDP expansion, all of which added pressure on the copper market. The Bank of Japan surprised the market by keeping interest rates unchanged and not extending the term of fixed-rate loans, which disappointed expectations and further weighed on copper prices. This decision reflected growing concerns over Japan’s economic outlook, adding to the downward pressure on the metal. In just a few days, a series of negative macroeconomic signals emerged from both domestic and international markets, acting as a key driver behind the recent decline in copper prices. With demand growth slowing down, the underlying support for the copper market is weak, making it more vulnerable to broader economic sentiment. Copper supply concerns have eased
India's largest copper smelter, operated by Birla, was forced to shut down due to environmental issues at the end of March. However, recent updates indicate that the facility is expected to resume operations according to schedule. This gradual return of production is helping to ease global copper supply constraints. Meanwhile, Indonesia’s Freeport Grasberg mine remains suspended due to force majeure, which has had a short-term impact on supply. However, with no strong recovery in Chinese demand, and smelting capacity gradually increasing, the gap between supply growth and demand is likely to persist, putting continued downward pressure on copper prices in the coming months. Market outlook
Currently, copper prices have returned to the range of the moving average, but the rebound has been weak, driven mainly by ongoing concerns about global economic growth. Over the past couple of days, the domestic market was affected by the Dragon Boat Festival holiday, and while some negative economic news has been absorbed by the market, the overall sentiment remains cautious. The temporary shutdown of major copper mines still provides some support to the price, but this effect is limited. In the short term, the decline in copper prices is expected to be constrained, with the market likely to remain in a weak and volatile range. As fundamental factors continue to weaken, concerns about demand will become more pronounced, leaving the copper market exposed to further downside risks.
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