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Copper Hovers as China Is on Holiday

By Jim Williams

The price of copper opened this morning in just about the same place it was last week. The turning of the calendar over the weekend marks the end of the third quarter – an up and down stretch for the red metal, but a positive one. One which saw copper rise to its highest level since September 2014 when December COMEX futures traded $3.1785 per pound on September 5.

Copper closed the quarter at the $2.9475 per pound. That translates to a 9.21% gain. LME copper closed Q3 at $6,530 per ton which translates to a 10.36% increase for the quarter. In 2017, COMEX and LME copper have gained 17.50 and 18.30% respectively.

“One of the best indicators for the short-term price direction of the base metal over recent months has been the level of LME stocks,” says Andrew Hecht of Seeking Alpha. “Before the initial rally that took copper above resistance, stocks fell from 350,000 metric tons to under 250,000 tons. Over the past months, each time stocks fall copper tends to appreciate and when inventories increase the metal tends to correct lower.”

“For the first few weeks of October, conditions look right for the LME copper price to stabilize,” Barclays said in this week's industry note. “The depletion of domestic refined inventory within China, coupled with supportive import arbitrage conditions, provides a compelling case for short-term fundamental support.

“With the September quarter this year the best quarter for copper since the December quarter last year, we expect a bearish overall direction for prices in the current quarter.”

All of this while China markets take the week off to celebrate National Day – a week-long holiday celebrating the anniversary of the People's Republic of China – which was created on October 1, 1949.

The Almighty Dollar
The dollar rose following Monday's release of strong U.S. economic data as ISM manufacturing purchasing managers' index (PMI) for September was at 60.8, higher than both the expected reading of 57.9 and August's print of 58.8.

What is U.S. ISM Manufacturing Purchasing Manager's Index (PMI)? Click here for details.

According to Metal Bulletin, the final manufacturing PMI for September was close to expectations at 53.1, while August construction spending rose 0.5% month on month, also largely in line with expectations. ISM manufacturing prices for September came in at 71.5, higher than the forecast reading of 64.5.

Due later this week—ISM non-manufacturing data, the U.S. trade deficit and non-farm payrolls for September.

Other Copper Highlights
LME copper saw a bump in price in early morning trading on the heels of news that Indonesia's giant Grasberg mine can continue to export copper concentrate even if permit talks are not resolved this month.

 

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