Commodity Roundup: Copper faces big weekly drop as China’s third plenum underwhelms

Copper futures (HG1:COM) on Friday were on course of their worst week since 2022, after investors were underwhelmed by China’s policy meeting called the Third Plenum, while natural gas prices, too, were set for a sharp weekly fall.

Copper futures (HG1:COM) were set for a second consecutive weekly fall, down 7% so far, after China’s Third Plenum, a four-day session, failed to provide any details on further stimulus measures aimed at promoting economic growth.

President Xi Jinping vowed to make high-quality development the key driver of the world’s second-largest economy. That left investors disappointed that there wasn’t a greater focus on tackling structural issues in the economy, such as the beleaguered property sector, ANZ analysts said.

“Sentiment wasn’t helped by data showing China’s unwrought copper and copper product exports hit a record for a second month, as weak domestic demand forces traders to rely on international markets,” the brokerage added.

Copper was steady at $9,400 a ton on the LME at 11:07 a.m. in Shanghai, after posting losses in the first four days of the week.

Potentially relevant stock tickers include (BHP), (RIO), (VALE), (TECK), (ERO), (FCX).

According to BMI – A Fitch Solutions Company, commodity prices have trended lower in July, with gains for precious metals and softs outweighed by losses for grains, energy and industrial metals.

Gold was an outperformer, lifted by a soft U.S. inflation print, a weaker dollar and falling bond yields. In contrast, prices for industrial metals generally softened, subdued by lacklustre demand in Mainland China.

“Agricultural commodities also diverged. Cocoa was a bright spot, with price action buoyed by a challenging supply outlook and increasingly bullish market positioning. Meanwhile, grains suffered, due to ample production and waning import demand,” the brokerage added.

In the energy market, brent crude has remained broadly range bound over the past month, fluctuating between $84.3/bbl and $87.4/bbl at close, as markets appear to be somewhat lacking for direction, as participants weigh up conflicting drivers on the supply and demand sides, BMI analysts said.

“Production risks are elevated, amid ongoing tensions in the Middle East and the conflict between Russia and Ukraine.”

U.S. natural gas futures were down about 10% so far this week, weighed down by forecasts of less hot weather and lower demand.

High storage levels, the loss of weather-driven demand, and lower exports of liquefied natural gas tied to outages at the Freeport LNG export plant in Texas have weighed on prices, which recently reached their lowest levels since early May.

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