Copper has Reversed $1,000 a Ton Since All-Time High Last Month

Copper prices fell Tuesday to their lowest level in two months on concerns China may intervene on rising commodity prices. Freeport-McMoRan $FCX, the world’s biggest publicly listed copper producer has also fallen. The strength in copper had been boosted by a supply constraint, a weaker USD and China’s economy.

Image: Freeport McMoran Copper Mine

Copper prices three-month copper forward on the London Metal Exchange fell 3.8% to $9,582.50 a metric ton Tuesday. it was the steepest one-day decline since March. Speculation that China’s strategic stockpiling body, the State Reserve Bureau, is planning to gradually release some of its stockpiles of copper, aluminum and zinc over the coming months led to the ehsrp fall analysts said.

Copper 6 15 21 240

China consumes half of the world’s refined copper.

Investors fear such steps could be part of a broader push from Chinese officials to temper rising prices. Copper and iron ore have been bought aggressively up this year in a broad rally of industrial metals. Copper has been getting speculative support because of its potential role in a transition to green energy and because of tight supplies due to lockdown-related mine closures. As such copper also benefited from economies reopening causing speculative bets to be placed and bullish predictions from brokers and analysts fed the fire.

Impact on Freeport-McMoRan

Last month FCX raisded its full-year cooper production targets higher to 3.8 billion tons this year and 4.4 billion in 2022. “It is becoming increasingly more challenging and costly for our industry to develop supplies to meet the dramatically increasing demand for copper,” Adkerson said. “And our team literally loves where our Freeport is situated in this environment.”

Freeport-McMoRan shares were trading down −$2.70 or -6.85% at $36.78 Tuesday lunchtime. Still the stock has a year-to-date gain of around 46%.

FCX 6 15 2021

The question how much hot money is in the mix?

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