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Business as Usual for Copper

Business as Usual for Copper

The price of copper dropped almost 1% Monday as investors hold their collective breath to see what impact President Trump’s tariffs on steel and aluminum have on the markets in general.

The red metal opened this morning a tick under $3.13 a pound and $6,900 a ton – below the proverbial ‘line in the sand” of $7,000 that investors use to gauge the commodity. Despite showing a slight gain (0.48%) last week, copper is down 5.8% so far in 2018.

Prices have fallen since hitting four-year highs in December thanks to concerns over higher interest rates here in the U.S. and the prospect of an economic slowdown in China, the world’s largest consumer of industrial metals.

While that all sounds like doom and gloom, as mentioned last week, copper has not dipped below $3 a pound so far this year.

That positive spin on copper is being felt where it starts – in the copper mines. According to Financial Times, Antofagasta, one of the world’s largest copper mining companies, is reaping the benefits of the red metal’s success over the last 15 months. The Chile-based miner reports its revenue rose 31.1 percent mainly due to the rise in copper prices and volumes (up 1.5 percent).

The company declared a total dividend for 2017 of 50.9 cents per share. That is up a staggering 177 percent higher than 2016. Executives say the strong performance is a result of higher copper prices and some self-discipline.

“We have continued to invest through the cycle while maintaining our focus on cost discipline and operating performance,” Antofagasta’s chief executive Iván Arriagada said in a statement. “As a result, as copper prices rose in 2017 Antofagasta had another successful year…meeting our safety target of zero fatalities and achieving both our production and cost guidance.”

Different Points of View

Asking someone what they think will happen to the price of copper is almost like asking someone to predict the weather. It is different almost every day. Just like the weather forecaster on your local TV station, the success (or failure) of copper is based on forecasts. While no one can use a crystal ball to predict where the red metal is going, many experts invest their time – and money – into trying to inform others on where the market will go next. For many reading this article, the price of copper plays a big role in how they run their business. Is the price going up, or will it crash and burn?

Here are two different perspectives on where the price of copper might go:

Copper: Stocks and A Technical Pattern Suggest New Highs Soon – Andrew Hecht, Seeing Alpha

Are Copper Prices Setting Up for A Fall in 2018? – Chris Kimble, Kimble Charting Solutions – See It Market

A Look at the Market Influences

In the week ahead, investors will be focusing on today’s U.S. inflation data to gauge how it will affect the coming months. Reports on U.S. retail sales and euro zone inflation will also be closely watched.

Investing.com has compiled a list of these and other significant events likely to affect the markets this week.

Tuesday, March 13

Australia is to release a report on business confidence.

The U.S. is to produce data on consumer inflation.

Wednesday, March 14

China is to publish data on industrial production and fixed asset investment.

ECB President Mario Draghi is to speak at an event in Frankfurt.

Later in the day, the U.S. is to release data on retail sales and producer price inflation.

Thursday, March 15

New Zealand is to report on fourth quarter economic growth.

The Swiss National Bank is to announce its latest monetary policy decision and publish its rate statement.

The U.S. is to release a string of economic reports, including data on jobless claims, import prices and manufacturing activity in the New York and Philadelphia regions.

Friday, March 16

The euro zone is to publish revised inflation data.

Canada is to report on manufacturing sales.

The U.S. is to round up the week with data on building permits, housing starts and industrial production.

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Jim Williams

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