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China Economic Concerns Continue to Weigh on Copper ETPs

This article was originally published on ETFTrends.com.

Copper prices and metal-related exchange traded products weakened Tuesday as anxiety over the Chinese economy continues to weigh on the demand outlook.

On Tuesday, the iPath Bloomberg Copper Subindex Total Return ETN (JJCTF) declined 0.1%, United States Copper Index Fund (CPER) fell 0.1% and iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJCB) decreased 1.7%.

Meanwhile, Comex copper futures were 0.3% lower to $2.78 per pound. copper prices have weakened more than 15% since a June four-year high on growing unease over tariffs and a gradual slowdown in Chinese growth, which would reduce demand for metals used in construction and manufacturing. Year-to-date, JJCTF declined 18.4% and CPER decreased 16.9%.

Recent data revealed that inflation in China rose to a seven-month high last month, which diminishes the central bank's ability to stimulate growth, and figures also showed a 49% year-over-year decline in home sales in China's 10 major cities for this year's Golden Week, a period typically marked by big-ticket purchases, the Wall Street Journal reports.

Worries over weaker growth in the emerging Asian economy, which accounts for about half the world’s copper and a similar proportion of other industrial materials demand, along with China’s months-long tariff kerfuffle with the U.S., have hit sentiment in the metals markets, analysts warned.

Base metals “will continue to see choppy price action amidst this ongoing macro uncertainty, although given the more bullish micro situation we look at price dips as buying opportunities,” Alastair Munro, a broker at Marex Spectron, said in a note.

The broker highlighted the low warehouse inventories and argued that it is likely that “any ratchet higher in trade war tensions is likely to result in China resorting to infrastructure stimulus to support growth,” which would be a net positive for copper prices.

For more information on the copper market, visit our copper category.

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