By admin 
What’s going on here?
Base metals are in turbulent waters as a robust US dollar and rising Treasury yields make dollar-denominated commodities costlier for global buyers.
What does this mean?
The mixed performance of base metals underscores the sweeping impact of the US dollar and Treasury yields. Copper on the London Metal Exchange ticked up to $8,991 per metric ton, lifted by shortages in copper concentrate—especially as China’s top copper smelters announce new price guidance for early 2025. Meanwhile, Shanghai’s January copper contract slid by 0.3% even as inventories jumped 4.7%, still hovering near ten-month lows. Other LME metals showed mixed trends: aluminum and nickel slipped, while zinc edged higher. Analysts point to copper’s volatility as partly due to end-of-year trading shifts, with businesses concluding their yearly trading routines.
Why should I care?
For markets: Exchange rates shape commodity costs.
The strong US dollar is hiking costs of dollar-priced commodities like metals for overseas buyers, impacting their demand and pricing strategies. Combined with volatile Treasury yields, this creates a hazy environment for investors in metals markets, influencing trading dynamics worldwide.
The bigger picture: The global supply and demand tug-of-war unfolds.
As China, a major consumer of metals, sets its Q1 2025 copper treatment charges amid supply shortages, global market players are closely watching these changes. Inventory level disparities and price swings could indicate larger economic shifts, especially in the manufacturing and construction sectors that heavily rely on metals.