The price of copper opened this morning just over $3 a pound. This after the red metal dipped below the $3 level to end last week – marking the first time this year the commodity sunk below that figure.
In fact, copper dropped a whopping 4.48% last week, taking other industrial commodities with it.
Markets were wild last week as stocks plunged, and the dollar dipped. Many think the movement was a result of the Fed hiking rates by 25 basis points last Wednesday, even though the market anticipated the increase. The dollar moved lower following the Fed meeting.
Tariffs against China were a different story. The announcement of $60 billion in tariffs on China last week sent stocks reeling. The Dow fell 724 on Thursday and another 400 more on Friday. The dollar moved lower.
That all changed this week. The DJIA had its best one-day gain in nearly two and a half years on Monday, closing up over 600 points, following reports of U.S. and China trade talks. According to Reuters, senior U.S. officials are now asking China to cut tariffs on imported cars, allow foreign majority ownership of financial services firms and buy more U.S.-made semiconductors in negotiations to avoid plans to slap tariffs on a host of Chinese goods. Base metal prices climbed ever so slightly in early morning trading Tuesday as a result, creeping back over the $3 pound level in three-month copper on the London Metal Exchange. “Fasten your seatbelts, the volatility is the norm rather than the exception these days, and that is likely to continue,” states frequent tED contributor Andrew Hecht of Seeking Alpha. “Commodities are ground zero for the tariffs issue, and I expect high volatility to continue in markets across all asset classes. The dollar continues to sit near its lows, and while a recovery rally is possible, and maybe even probable, the long-term picture remains bearish for the foreseeable future which could be good news for commodities prices.”
Copper and Labor News
Workers at Antofagasta Plc’s Los Pelambres copper mine in Chile reached an agreement on a new labor contract, defusing the risk of a strike, the union said on Monday. With several other key labor contracts up for renewal, “the risk of copper supply disruptions due to strikes is still high as workers demand higher wages while mining companies are in austerity mode and strongly against locking in higher fixed costs in perpetuity,” reports Reuters.
Deeper Dive Into U.S. – China
Here is a Reuters article on Investing.com that takes a deeper look at the possible behind-the-scenes negotiations between the U.S. and China.Tagged with 2018, copper