Copper prices are signaling investors are negative on the economy: ANZ

The drop in copper prices is a sign that investors are not optimistic about the economy, an ANZ bank analyst said.

Copper is seen as a major symbol of economic health because of its widespread use.

At the moment, prices are falling even though there are no signs of slowing down or inflation, says Daniel Hynes of ANZ.

“On the contrary, it is very different – we are seeing signs in China that show the picture is going well,” he said.

But traders have seen tightening monetary policy lead to slower growth, and this is reflected in copper prices, he told CNBC “Street Signs Asia” on Tuesday.

“It tells me that investors are very low on the economy,” he said.

The price of red metals has fallen sharply a quarter since 2011 in the second quarter of this year, according to Reuters.

The three-month bronze on the London Metal Exchange was $ 7,341 per tonne Thursday morning in Asia, the worst fall since early June.

Copper seems to be “reliable,” Hynes said.

He acknowledged that the copper market was thriving in line with global outlook as the US Federal Reserve raised interest rates, but he said. acquisition issues are expected to stabilize the market and China’s monetary policy over the next six to 12 months will increase demand.

Chinese President Xi Jinping has called for an “all-out” move in April, and Reuters has said the country will set up a state fund.

But James Kan, head of Asia-based research at UBS, said Covid curbs in China could reduce the demand for industrial goods even though Beijing wanted to boost its economy through construction.

“Perhaps, travel restrictions could weaken the routes that seek to return,” he told CNBC’s “Squawk Box Asia” on Tuesday.

Recovery is not a Swiss bank account, “said Kan.

He also said that growth is growing faster than the industry, and that quantity will be a problem.

Despite the demand for scrap metal in China, storage could take on that growth. In the meantime, globalization is expected to decline, reducing demand.

“I think that the total interest you want to pay [is] “It may not be good for the prices to be good,” Kan said.

– CNN’s Evelyn Cheng contributed to this.