Morning Copper Markets
Copper Futures Head for Weekly Decline on Swelling Stockpiles
Copper prices are on track for their seventh weekly drop in the past eight weeks, primarily due to a significant increase in inventories on the London Metal Exchange. This accumulation reflects an ongoing mismatch between supply surpluses and weakening demand from China, the world's leading consumer of the metal. Although the prices are pressured by these rising stockpiles, optimism remains due to anticipated demand and potential upcoming U.S. Federal Reserve rate cuts. Additionally, while China’s imports of unwrought copper and copper products have fallen to a four-month low in June due to high prices dampening demand, the import of concentrates has risen as smelters boost their processing capacities.
Rio Tinto Considers Bid for Teck Resources
Rio Tinto is exploring potential acquisitions, including Teck Resources Ltd., as reported by Sky News. This consideration follows BHP Group's failed attempt to purchase Anglo American Plc. Discussions with bankers have occurred, but it's unclear if Rio Tinto will make an offer for Teck. The mining sector may see more mergers and acquisitions, though deals involving major companies could face strong regulatory scrutiny due to the importance of securing supply chains for critical minerals like copper. Recently, Teck sold its coal business to Glencore Plc, making it a more focused and attractive takeover target. Any potential acquisition would need approval from Teck's major shareholder, Norman Keevil. Responses from Rio Tinto regarding these discussions have not yet been provided.
Biden Defiant About Staying in the Race; Worse Inflation Predicted Under Trump
Despite criticisms and the growing call from his party to drop out of the reelection race, President Joe Biden remains firm about continuing his campaign. Recently, he participated in a press conference that, while strong on foreign policy, did not convince his fellow Democrats of his capability to defeat Donald Trump. Upcoming U.S. producer price data will serve as a significant indicator of pipeline inflationary pressures, which are a central economic concern. Meanwhile, most economists forecast higher inflation, deficits, and interest rates under a potential second Trump administration compared to Biden’s policies, according to a Wall Street Journal survey.
Macroeconomic Data
Sources: Bloomberg, StoneX
Copper Prices and Spreads
Sources: Bloomberg, StoneX
Comex Active & LME 3M – 3 Day Price Trend
Sources: Bloomberg, StoneX
Comex Active Month – 6 Month Price Trend
Sources: Bloomberg, StoneX
LME Rolling 3M – 6 Month Trend
Sources: Bloomberg, StoneX
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