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Copper Prices Drive Higher

By Jim Williams

The price of copper steered higher to start the week thanks, in part, to the electric car.

The red metal drove higher to start the week after the LME Week industry gathering in London last week. The buzz at the event has investors bullish about copper's outlook, especially because of anticipated growth in demand for electric vehicles, which depend heavily on copper.

Copper closed up 1.1 percent Monday and opened this morning at $3.12 per pound. The price of copper has climbed 7 percent in the first five weeks of this quarter and is on track for a sixth straight quarter of growth. Traditionally, September and October are peak consumption seasons in China, while usage declines during winter months (November to March).

Cutting Through the Cloud in China

According to Reuters, a pollution crackdown in China could mean blue skies for copper and markets in general down the road. The world's second largest economy has recently been cracking down on its environmental laws. Including sending inspectors to factories for surprise inspections and imposing fines, jail time for serious offenders, and even shuttering some factories until they comply. While this cleanup is impacting China's industry right now, the long-term expectations are positive. You can read more about the pollution crackdown here.

Back Here in the States

The dollar is little changed, lessening some headwinds for metals after surging on bets that the Federal Reserve will raise interest rates again next month and tighten further into 2018 as U.S. economic growth remains firm.

In U.S. data released Friday, the final services purchasing managers' index (PMI) for October was down to 55.3 from 55.9. U.S. average hourly earnings were unchanged at 0.0%, against a forecast of 0.2% and down from 0.5% last month. The unemployment rate was at 4.1%, the lowest in nearly 17 years, down a tick from last month's 4.2%. U.S. non-farm employment rose 261,000 in October, the largest increase since July 2016, but was below the expected 312,000 gain. The ISM non-manufacturing PMI surprised to the upside at 60.1, above expectations for a reading of 58.5. This was the 94th consecutive month of positive gains.

Global Markets Continue to Roll

A quick glance at the markets shows the economy continues to thrive:

  • Japan's Nikkei hit its best level since 1992 overnight
  • Germany's DAX scored a record high
  • All three of Wall Street's major indexes closed at fresh peaks

We will keep an eye on the markets – especially copper – as 2017 winds down; with an eye on 2018 and beyond.

 

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