Copper prices on the London Metal Exchange decreased by 1.4% to $14,154 per ton in October 2023. This price drop occurred amid an energy market affected by tensions in the Middle East and disappointment in the financial returns of companies active in the field of artificial intelligence.
Middle East Tensions and Their Impact on the Energy Market
Following recent tensions in the Middle East, investors migrated towards safer assets such as bonds. This situation led to a collective decline in the prices of base metals, including copper. After three months of consecutive growth, this metal, serving as a barometer for the global economy, ultimately faced a price drop in October.
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Imbalance in the Physical Market and Production Halt
While trading boards indicate falling prices, the physical copper market is facing a supply shortage and serious imbalances. The surge in copper import costs in China to over $200 per ton, the highest level since 2017, reflects the country's high demand for purchases. On the other hand, the halt of Rio Tinto's mining operations in Mongolia due to an earthquake and a 1.1% decrease in the production of Chinese refineries have limited copper supply.
This deep contradiction between the temporary drop in exchange prices and the actual shortage of the metal in the physical market indicates that as soon as the excitement subsides, these shortages could lead to a renewed rise in prices. Experts believe that due to the existing imbalance, copper prices may experience significant fluctuations in the near future.
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