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Copper Bounces Back

By Jim Williams

Copper continues to prove its resiliency. The price per pound bounced back Monday after taking a beating on Friday after what some market experts say was an overdue correction after eight straight weeks of positive movement. The correction was 'blamed' on technical selling and weaker than expected data out of China.

After dropping 10 cents on Friday, copper for December delivery on the Comex division of the New York Mercantile Exchange climbed 0.9 percent to $3.0685 per pound Monday, before settling at this morning's opening mark of $3.02.

Prior to Friday's drop in copper, tED contributor Andrew Hecht of Seeking Alpha said, “Copper is fast approaching another level of technical resistance at the 2014 high of $3.2745 per pound. I believe it continues to look strong on the back of the weak dollar and the upcoming Chinese Congress in October when they will roll out next year's economic plans.”

Yesterday he said support is around the $2.83 per pound level. This is the price copper broke to the upside from, which tells us that there is more room for corrective price action, “But the bullish trend remains intact,” Hecht concludes.

China's Copper Imports in August
China imported 390,000 metric tons of unwrought copper and copper products in August 2017—compared to 350,000 metric tons in the same month last year. This is the fourth consecutive month that China's unwrought copper imports have been flat.
In the first eight months of 2017, China's unwrought copper imports were at approximately three million metric tons—a year-over-year fall of 12.5 percent. Experts say despite the double-digit difference, the steep decline in China's unwrought copper doesn't necessarily reflect a demand slowdown.

Copper Reflections (from www.fastmarkets.com)

  • The three-month copper price rose $62 to $6,755 per ton.
  • “[China's] imports of copper products in August hit 390,000 [tons]. While this was up 11.5 percent year on year, the fact it was unchanged for a third month seemed to disappoint the market,” ANZ Research said.
  • “China's power and infrastructure sectors, which account for approximately 4.6 percent and 9.4 percent of copper end-use, respectively, will keep demand growth elevated in the largest consumer of refined copper. Additionally, over the longer term, rising electric vehicle production and renewable energy systems will bolster copper demand,” BMI Research said.
  • In supply-side news, copper miners in Chile are increasingly optimistic about industry prospects for the mid-to-long term but have said that caution, especially towards costs and investments, is still needed.

Further Reading

Is Copper Ready For A Pull Back? Read the Financial News article here.

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