Japan: Yen appreciation, economic uncertainty impact copper prices

On 5 May, JX Nippon Mining & Metals announced a reduction in the price of electrolytic copper. The price was cut by JPY 60,000/tonnes (t) ($414/t), bringing it down to JPY 1.36 million ($9,395/t). This adjustment reflected the changes in international market conditions and exchange rates.

The recent rise in the value of the yen and the decline of the dollar have significantly impacted domestic non-ferrous metal prices. Since international metal prices are set in dollars, fluctuations in exchange rates have a substantial effect on these prices.

Impact of yen appreciation on domestic non-ferrous metal prices

This reduction marks the first time in four months that the price of electrolytic copper has fallen below JPY 1.4 million ($9,672/t). As the yen continues to appreciate, it is expected that similar adjustments will be made to the prices of other non-ferrous metals in the future.

On the morning of the 5 May, the yen's exchange rate was around JPY 146/dollar. This represents a significant rise of about JPY 4 since the end of the previous week, marking the yen's strongest level in seven months, since January.

Yen strengthens, copper prices decline amid economic uncertainties

Previously, the yen had been weakening, and from early to mid-July, it was trading around JPY 162/dollar, which had been driving up domestic prices. However, expectations that the interest rate gap between Japan and the U.S. might narrow have caused the yen to strengthen and reverse its depreciation trend.

The price of electrolytic copper fell by JPY 1.4 million ($9,672/t) due to a decline in the London Metal Exchange (LME) copper market. At the end of July, LME copper prices dropped by 5.3% as uncertainties about the U.S. and Chinese economies raised concerns about future demand.

Stable copper prices amid supply concerns, economic uncertainty

In August, LME copper prices saw limited movement. Despite negative factors like worsening U.S. economic indicators, a strike at the Escondida mine in Chile on 2 August raised worries about copper supply, which helped to stabilise prices somewhat.

On 2 August, the official spot price for copper was $8,977/t, which was a slight decrease of 0.4% from the end of the previous month.

This article has been published under an agreement between BigMint and Japan Metal Daily.