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Copper Prices: Half Full? Or Half Empty?

Copper Prices: Half Full? Or Half Empty?

Depending on where you look, the price of copper is either up this morning (Shanghai prices gained thanks to a weaker dollar), or the price is down (according to Reuters an increase in inventory pushed prices down).

I guess your sentiment on the daily dilemma depends on whether you see the glass as half empty or half full. The half-full view would hang their hat on the weaker dollar behind the surge in Shanghai. Those on the less optimistic side of the group may look at the overabundance of supply in the London Metal Exchange (LME) and think the sky is falling.

Regardless of which view you take, copper prices are at the lowest level in more than a month and the price per ton is hovering just above the $7,000 level. Copper fell 1.13% last week to close under the $3.20 level on March futures. The red metal has declined since hitting almost four year highs in late December. Copper opened this morning at $3.13 a pound. Click on the image below for current pricing.

“We think the recent copper price rebound is mostly driven by dollar weakness,” Argonaut Securities wrote in a note. “Any dollar weakness reversal may weigh down on copper prices, in our view.”

The price of copper in Shanghai gained even as official data showed China hit a record volume of refined copper in December, suggesting the world’s biggest copper consumer is well supplied.

Speaking of well supplied, the LME supply saw a boost of over 40,000 tons this morning. That pushes the inventory to its highest since the end of October. China’s refined copper production climbed to an all-time high in 2017, rising 7.7% year on year to 8.89 million tons. December was also strong at 865,000 tons.

Further Reading
The Wall Street Journal posted an article titled, “You Will Want to Read This Living Legend’s Thoughts on Copper”. They are correct. We did. Now you can too and find out why the “Living Legend” says, “You’re going to need a telescope to see copper prices in 2021.” The rest of the story can be found here.

Looking Ahead
The world’s political and business leaders are heading to Davos, the Swiss Alpine resort where the World Economic Forum’s annual conference begins today. The official theme of the 2018 meeting is to build a shared global narrative and is entitled “Creating a Shared Future in a Fractured World.”

Investors will be focused on the outcome of monetary policy meetings by the ECB and the Bank of Japan (BoJ). Market watchers will also be looking ahead to data on fourth quarter growth from both the U.S. and the UK.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Tuesday, January 23

  • The BoJ announced its benchmark interest rate and published a rate statement which outlines economic conditions and the factors affecting the monetary policy decision. Read the details here.
  • The UK is to release data on public sector borrowing.
  • The ZEW Institute is to report on German economic sentiment.
  • As mentioned above, the first day of World Economic Forum meetings are due to take place in Davos, Switzerland.

Wednesday, January 24

  • The euro zone is to release data on manufacturing and service sector activity.
    The UK is to publish its monthly jobs report.
    The U.S. is to report on existing home sales.

Thursday, January 25

  • New Zealand is to report on consumer price inflation.
    The Ifo Institute is to release data on German business climate.
    The first day of World Economic Forum meetings are due to take place in Davos, Switzerland.
    The EBC is to announce its latest monetary policy decision. The announcement is to be followed by a press conference with President Mario Draghi.
    Canada is to release data on retail sales.
    The U.S. is to produce reports on jobless claims and new home sales.

Friday, January 26

  • Financial markets in Australia will be closed for the Australia Day holiday.
    The UK is to release preliminary data on fourth quarter economic growth.
    Canada is to release what will be closely watched inflation data.
    The U.S. is to round up the week with preliminary data on fourth quarter economic growth, as well as a report on durable goods orders.
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Jim Williams

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