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Copper News – All Eyes on Trade Talks

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Copper News – All Eyes on Trade Talks

Copper prices slipped in overnight trading as investors feared Thursday’s U.S.-Chinese trade talks would make little progress. This follows a positive day for the red metal on Monday as traders in China returned to work after a week-long holiday.

The newest wrinkle in the trade talks is the latest move by Washington to blacklist 28 Chinese companies over Beijing’s treatment of predominantly Muslim ethnic minorities, a move that will bar them from buying American components without government approval. The Trump Administration says the blacklist decision is not connected to the trade talks. China says it will hit back over the measures and “urged the U.S. side to immediately correct its mistake.”

Reports out this morning say China’s delegation may cut short their stay in Washington and leave Friday instead of Saturday to remove the possibility to extend the talks into Friday evening, the South China Morning Post reported.

“The consensus remains skeptical about a resolution, but a mini-deal, just on tariffs, might be a concrete expectation,” Gianclaudio Torlizzi, Partner at consultancy T-Commodity in Milan told Reuters. “The risk-reward now points to the upside for copper…in particular because the short positioning is elevated.

“This makes it vulnerable to squeeze higher in case a truce between the U.S. and China is reached,” concludes Torlizzi.

“Can something happen? I guess, maybe. Who knows? But I think it’s probably unlikely,” President Donald Trump said when asked about the chances of progress at this week’s trade talks.

Copper has been under pressure since the first tariff was imposed back in the summer of 2018. The red metal constantly fluctuates based on the global economy, hence the moniker Dr. Copper. Well, the EKG monitor for copper has been on an even more elaborate roller-coaster ride over the last year and a half thanks to the on-again, off-again trade talks and the expectations of a resolution.

Click on the chart below to see the most up-to-date copper pricing.

Andrew Hecht, of Seeking Alpha says he expects the commodities markets to face a myriad of issues through Q4, which was also a very volatile quarter in 2018. He referenced the above-mentioned trade talks and how they will continue to be a dominant force in the price of copper. He also points to Brexit, Iran, any possible impeachment processes, and the 2020 election. “I expect lots of volatility in the commodities sector in Q4. If the final three months of 2019 are anything like the same period in 2018, fasten your seatbelts for lots of price action.”

We will keep an eye on this week’s trade talks and see what impact it has on copper. You may want to follow Andrew’s advice and buckle up – we could be in for a heck of a ride!

 

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Jim Williams

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