Copper prices are at the bottom of 3 months: A record of 36 years in aluminum

Price movements of industrial metals have diverged from each other in global commodity markets. Copper traded on the London Metal Exchange (LME) lost value due to the weakening industrial demand and the expectation that interest rates in the USA will continue to rise. In the aluminum market, the contraction in physical supply and the rapid decline in stocks brought the price premium to historical levels.

The three-month copper contract in the LME decreased by 1.2 percent to 13 thousand 645 dollars per ton as of 15:00 GMT. Copper, which reached $13,629 during the session, tested its lowest level since July 29.

The 200-day moving average, which is considered a technically important threshold in the market, is around 13 thousand 615 dollars per ton. This level is among the closely followed support points in the short-term movement of copper prices.

FED EXPECTATIONS WERE AFFECTIVE IN THE PRESSURE ON COPPER

Uncertainties regarding global industrial activities were decisive in the decline in copper prices. Concerns that industrial demand may weaken were also added to the sales in technology stocks.

The fact that the inflation data announced in the USA was above expectations strengthened the predictions that the Fed could continue its tight monetary policy. The possibility of continuing interest rate increases stood out as one of the factors that increased the pressure on industrial metals.

Statements by Fed officials that a 50 basis point interest rate increase was among the options at the monetary policy meeting to be held on December 8-9 supported the cautious outlook in the markets.

SPOT PRICE PREMIUM IN ALUMINUM HAS REACHED A 36-YEAR PEAK

While copper prices decreased, a different picture emerged in the aluminum market. The contraction in physical metal supply and the decrease in stocks followed in stock exchanges caused cash delivery aluminum to be traded at higher prices compared to futures contracts.

The price difference of spot aluminum in the LME compared to the three-month futures contract exceeded $175 per ton, reaching the highest level in the last 36 years.

This market structure, defined as backwardation, shows that cash delivery is more expensive than deferred delivery. The increase in the price difference in question points to the tightness in physical aluminum supply, especially in the short term.

NOTABLE DECLINE IN ALUMINUM STOCKS

The decline in stock market stocks, one of the most important indicators of the supply squeeze, continued.

According to LME data, aluminum stocks decreased to 226 thousand 350 tons. Thus, the amount of stock has decreased by approximately 56 percent since January.

Aluminum stocks monitored on the Shanghai Futures Exchange (SHFE) also decreased by 31 percent last week to 132 thousand 605 tons. This amount stood out as the lowest stock level recorded since December.

On the other hand, the three-month aluminum contract in the LME was traded at $ 3,061 per ton with a loss of 0.2 percent. At SHFE, the November-term aluminum contract was priced 355 yuan above the December-term contract.