China Copper Trading loses its charm

On March 24, the unexpected drop in *** exposed the sensitivity of copper to changes in China's financial markets.

Since the beginning of the year, *** has fallen 2.8% against the U.S. dollar. This is a very surprising trend. *** Exchange rate rises have been one of the safest bets on the global market in the past decade. Shanghai Copper has fallen 14.7% since the beginning of the year. China’s copper imports in February fell by 26% from the previous month.

Linking the depreciation of *** and the fall in copper prices is the use of copper as a trading tool.

Traders first purchase copper from overseas at a low price in US dollars, and these copper are imported into the country and used for mortgages. These funds are used to invest in high-yield products. When the product matures, traders can repay ** and profit from the spread.

In February and March, *** accidentally collapsed. The model of using US dollar loans to repay loans was no longer attractive. In February, copper imports fell. A large number of unmanned copper stocks led to a sharp drop in prices. Shanghai copper narrowed its premium over copper.

The slowdown in China’s economic growth is also one of the factors causing the price of copper to decline. The decline in exports in February and the deceleration in industrial output led to a downward revision in economic growth projections. The median survey in March showed that China's GDP growth rate in 2014 was expected to fall to 7.4%, and the forecast for the beginning of the year was 7.5%.

However, the slowdown in China's economic growth is a long-term trend. In fact, it is the use of ** that has caused unexpected and rapid changes in the demand for copper.