by Jim Williams
Copper slipped slightly on Monday based on news of another drop in oil prices and a Band-Aid on the economic situation in Greece. Investors in all trading are waiting this morning with baited breath to hear from the U.S. central bank chief.
Three-month copper on the London Metal Exchange ended down 0.39 percent Monday to $5,671 after a 1 percent loss in the previous session. Volumes are still relatively thin as China is on a week-long break for the Lunar New Year holiday. China’s markets resume trading tomorrow.
But today, all the focus is on testimony by Federal Reserve Chair Janet Yellen before the Senate Banking Committee over whether the Fed will hike rates in June.
Slippery Slope in Greece and Oil
A deal agreed by euro zone finance ministers on Friday to extend debt-laden Greece’s bailout for four months boosted sentiment in some markets, but the deal provided Athens with much needed breathing room instead of a long-term solution.
“We’ve bought a bit of time, but has anything fundamentally changed? I’m not sure,” said Nic Brown, head of commodities research at Natixis in London. “You could very quickly get the market flipping from being positive now that we have a deal on Greece to being a little concerned about what the Fed might do later in the year.”
Also weighing on copper was a fall in oil prices, with Brent futures dropping below $60 a barrel.
Helping dampen losses was a report late on Friday saying global world refined copper market showed a 42,000 ton deficit in November, compared with a 29,000 ton deficit in October.
“Copper is in a range, and I don’t think it’s just restricted to copper. Oil is also in a range and trying to find a low,” said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.
“Buyers aren’t prepared to chase the market,” according to Williams Adams, head of research at Fast Markets. “They want to see whether China comes back with a spring in its step or not.” Adams was a little more positive over the longer term, “Fundamentals are not that bearish. We were looking at a 200,000 ton surplus this year that could easily disappear with supply disruptions. Then you’ve got a market that’s balanced, with relatively low stocks and a relatively low price.”
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