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From September 23 to 27, 2024, the LME (London Metal Exchange) major metal prices showed overall volatility. During this period, various factors such as the global economic situation, policy announcements from different countries, and the supply and demand status of major raw materials impacted the prices. In this post, we will analyze the price fluctuations of each metal and the reasons behind them in detail.

- LME International Price Fluctuation Trends for the Fourth Week of September

- Reasons for LME Price Fluctuations from September 23 to 27, 2024

1. Deteriorating Global Economic Conditions

The slowdown of the Chinese economy was identified as a major cause. In particular, indicators showing weak manufacturing activity raised concerns in the market about a potential decline in metal demand from China. As the world's largest metal consumer, a decrease in Chinese demand inevitably exerts significant pressure on the global metal market. This uncertainty has put downward pressure on metal prices.

2. Concerns Over Interest Rate Hikes and Economic Uncertainty

The possibility of additional interest rate hikes by the U.S. Federal Reserve (Fed) has led investors in the metal market to prefer safe-haven assets. Rising interest rates typically result in a stronger dollar, increasing the opportunity cost of holding commodities like non-ferrous metals. This has led to a decrease in investment demand for metals, resulting in lower prices.

3. Strengthening U.S. Dollar

During this week, the U.S. dollar showed relative strength. A strong dollar makes metal prices more expensive for non-dollar countries, leading to reduced demand. This was particularly evident in emerging markets, where metal purchases declined, contributing to the downward pressure on the prices of major metals traded on the LME.

4. Increase in LME Inventories

Changes in inventory were also significant. During this week, the inventories of major metals such as copper and aluminum increased, reinforcing the state of oversupply. An increase in LME inventories raises concerns about supply surplus, naturally leading to a decline in metal prices. The rise in inventory indicates that demand in the market is decreasing, which negatively impacts investor sentiment.

5. Uncertainty in Demand Forecasts

Ongoing global economic uncertainties and geopolitical risks have also played a role. Factors such as slow economic recovery in certain regions of Europe and Asia, along with global trade tensions, have strengthened negative forecasts for metal demand. In particular, the anticipated slowdown in growth for key consumers of industrial metals, such as manufacturing and construction sectors, has led to concerns about demand reduction, which has been reflected in prices.

- Conclusion and Outlook

The LME market this week exhibited volatility due to changes in the global economic environment and weakening demand from major metal-consuming countries, influenced by various economic and policy factors. In particular, the announcement of economic stimulus measures in China and the possibility of interest rate hikes by the U.S. Federal Reserve have had complex effects on prices. Additionally, the increase in investor risk aversion, strengthening dollar, and rising LME inventories have exerted continuous pressure on the metal market. Moving forward, these policy changes, along with manufacturing activity indicators and energy prices in various countries, are expected to be significant variables influencing metal prices. We recommend closely monitoring these trends.