Copper Under Pressure
Weaker copper prices on Friday reflect the return of uncertainty around US/China trade relations. Prices have been congested through the week, lacking follow through on the back of the push higher in response to news that the US and China have agreed a 90-day window of reduced tariffs to allow for fuller trade negotiations. While risk sentient was initially bolstered by the news, it seems the upside impact of the deal has worn off now and without any fresh positive headlines, commodities prices are vulnerable to a continued drift lower. Indeed, with the US continuing its efforts to scale back dependence on Chinese imports, traders are worried of a shift in global supply chains that will impact copper prices unless a long-term trade deal is agreed.
Inventories Surplus Forecasts
Alongside the creeping uncertainty around US/China trade, copper prices have also been dampened this week by news that the International Copper Study Group has lifted its supply surplus forecast for the year ahead, citing weaker demand expectations and rising production levels. The group now sees the projected surplus hitting almost 300k tonnes by year end.
US/Chinas Trade Focus
Looking ahead, copper prices look likely to continue lower until we get some positive headlines on the US/China trade front. The fear is that if we go too long without any further progress, or if there are signs that talks are faltering, risk sentiment could unravel pushing copper prices down deeper.
Technical View
Copper
For now, copper prices remain atop the 4.5785 level support following the latest move back under the bull channel lows. If this support breaks, focus turns to deeper support at 4.30, in line with bearish momentum studies readings. Bulls need to break back above the 4.8010 level to alleviate near-term bearish risks.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.