Copper prices dropped in futures and spot markets on August 18, as escalating tensions in the Middle East heightened macro uncertainty, driving market concerns over inflation and pushing the U.S. dollar index higher, suppressing copper prices.
China's refined copper trading notably rebounded on August 18, while spot premiums surged across major markets. The decline in copper prices boosted downstream purchasing sentiment, coupled with traders' increased market participation after the contract rollover, leading to an overall improvement in trading volumes.
In contrast, copper scrap trading plunged, as holders were reluctant to sell at low, and downstream processors remained cautious amid ongoing industry tax policy adjustments. Moreover, as China's real estate sector was currently in a period of adjustment, the output of related scrap materials contracted significantly, worsening the scarcity of brass scrap and supporting scrap prices, further dampening processors' profits.
Trading in China's copper semis markets generally recovered on August 18, mainly due to falling raw material prices. Copper rod, copper tube, and copper bar consumption in sectors such as power grid and home appliances stayed stable, supporting a firm floor, while copper plate/strip and copper foil demand performance was relatively stronger, indicating that end-use sectors such as new energy, energy storage, and high-end electronics manufacturing will drive copper demand growth.
