Copper has been struggling for direction lately amid concerns over Federal Reserve policy and a disappointing Chinese economic recovery.
Copper prices fell to a five-week low earlier this week, hitting $8,110.50/t, after the Fed indicated its policy would remain tight for longer, pushing the dollar lower. a maximum of six months. Further rate hikes could add more headwinds at a time when demand for copper is already weakening.
Meanwhile, concerns about China’s property sector continue to rise after Moody’s Investors Service put two of the country’s strongest property developers – China Jinmao Holdings Group and China Vanke – on review for possible downgrades.
New home prices in China fell for a third month in August and at a slightly faster pace, according to the latest government data. Prices of new homes in 70 cities, excluding state-subsidized housing, fell 0.29% last month from July, when they fell 0.23%.
Late last month, Beijing rolled out a series of stimulus measures, reducing down payment requirements for home buyers and allowing lenders to reduce rates on existing mortgages, resulting in a surge in home purchases. earlier this month; However, that is already losing momentum. .
Still, there are some signs of recovery in economic activity in August. Industrial production rose 4.5% from a year earlier, while retail sales rose 4.6%, the latest data shows.
However, China’s recovery is still uncertain and everything related to the real estate sector continues to struggle. For copper, risks remain to the downside heading into the end of the year due to China’s uncertain outlook for the real estate sector. We believe intensive commodity stimulus is needed to support demand growth in the short and medium term. We maintain our price forecast of an average of $8,582/t in 2023.