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Copper: Please Remain Seated Until the Ride Comes to a Complete Stop

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Copper: Please Remain Seated Until the Ride Comes to a Complete Stop

From optimism over the weekend to a deflated feeling once the ‘work week’ starts. That kind of sums up the copper story for nearly a year and a half. The on-again, off-again, “yes there’s a deal… well not so fast,” roller coaster trade war between the United States and China seems to be a ride that just won’t come to a complete stop.

Over the weekend there was optimism from both sides of the negotiations. Then Monday happened. Copper prices ended lower yesterday in response to the latest doubts over whether a U.S.-China trade deal can be reached soon, possibly prolonging pressure on global growth and metals demand.

A CNBC report said Beijing was pessimistic about reaching a trade deal with Washington because President Donald Trump was reluctant to roll back some tariffs.

“A lot of the optimism over the last few weeks regarding a quick end to the trade war seems to have petered out,” Capital Economics analyst Keiran Clancy told Reuters. “We are still probably a long way off from a comprehensive trade deal and, irrespective of that, global growth is going to remain muted for the rest of the year and keep a lid on metals prices.”

“The price of copper has been following the ups and downs of the trade war,” states frequent tED contributor Andrew Hecht of Seeking Alpha. “Escalations in the dispute pushed the price lower and hope that an agreement or breakthrough was on the horizon lifted the price. The copper market has been leaning higher since an early September low, but the price has not been able to mount a sustained approach on the $2.70 per pound level.

“Copper continues to wait for news on trade and a final “phase one” trade deal before the price of the red metal moves significantly above the $2.70 level,” concludes Hecht.

Copper opened for trading this morning at $2.62 a pound. Click on the chart below for the latest price.

More Than Trade Talks

Copper did show a pulse during Monday’s trading sessions, as the red metal showed gains in early trading before the pessimism surrounding the trade talks dampened the run. The bump in copper was a result of China surprising the markets by trimming a key interest rate for the first time since 2015. The move caused speculation that further stimulus was on the way for the world’s second-largest economy. Another shot in the arm for the markets, in general, was news that the Trump administration issued a 90-day extension of a license allowing U.S. companies to continue doing business with China’s Huawei Technologies.

Asia Copper Week

The who’s who in the copper industry is in Shanghai this week for Asia Copper Week. The event brings an estimated 2,000 miners, traders, warehouse operators, analysts and executives from the world’s biggest copper companies together to talk shop.

Typically, the event talks about trends and future expectations. Reuters did a nice piece on what to expect from the event. If there is any news out of this week’s get together, we will report on it next week.

Digging Deeper – Futher Reading

Copper Up, Gold Down: The Investment World Is Shifting

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Jim Williams

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