Copper price recaptures $4 amid a solid turnaround from yearly lows

FXStreet · 21 Jun 2022 271 Views
  • Copper price stages a solid comeback amid supply disruptions woes.
  • Comex copper recaptures the $4-mark, USD weakness underpins.
  • Risk flows boost the metal but recession and China covid concerns loom.

Copper price on Comex has snapped a three-day downtrend this Tuesday, staging an impressive rebound from the lowest level since January 2021 reached at $3.94 on Monday.

The turnaround in the price of the red metal is mainly driven by the risk-on market profile, as investors take stock of the recent sell-off in global markets amidst aggressive Fed’s tightening expectations and looming recession risks.

The safe-haven US dollar extends the previous downfall, in the wake of a better market mood, helping copper price recover some ground. Easing trade tensions between the US and China is also boding well for the commodity. “Biden has said he is considering removing some of the tariffs imposed on hundreds of billions of dollars worth of Chinese goods by his predecessor in 2018 and 2019 amid a bitter trade war between the world's two largest economies,” Reuters reported early Tuesday.

Additionally, the non-ferrous metal also capitalizes on the emerging supply disruption concerns after workers at Chile's state-owned Codelco, the world's largest copper producer, will start a nationwide strike on Wednesday to protest the government and the company's decision to close a troubled smelter.

Meanwhile, falling copper stockpiles at the LME-registered warehouse add to supply concerns, underpinning copper price. Despite the abovementioned positive catalysts for copper, the so-called economic bellwether remains at the mercy of the broader market sentiment.

Copper buyers remain wary over the fresh lockdowns in China’s Shenzhen and Macau cities, as covid flareups spread to the southern part of the country. Further, the central banks’ tightening outlook-induced recession fears also remain a drag on the metal’s recovery.