Pretty incredible 20 cent move ($5k per contract !). No news at the CMEGroup on copper. Yeah toolazy, gotta be new improved sentiment over Europe and China with regards to growth. Technically, when copper could not break $3.00, that was a signal to the bears that the big bear move was over. If this gets anywhere near $3.40-$3.50, I'd say another short sell opp will be here. Everyone thinks "The Fed has won the war" when in fact, they have many more battles coming up. Rising interest rates should spark the next commodity down-turn despite the idea that rising rates = rising inflation = higher prices.
All of the volume has moved to the July contract (HGN3). Prices could reach $3.40/$3.50 should equities remain strong and China growth appears to be strengthening. However, we must watch the US dollar index here as copper trades inversely to it for the most part.
Central banks will ensure that interest rates will be low for years longer. Dollar seems to be in a bull flag since Apr 1.
Of course...until inflation starts to rear it's ugly head. It's been incredible to me that all of this "free money" has had no effect on inflation and money velocity. A strong dollar will keep a lid on Copper.
Tue May 7, 2013 9:52am EDT LONDON, May 7 (Reuters) - Copper dipped on Tuesday as investors nervously awaited economic data this week from top metals consumer China and on persistent concern about global metals demand despite a recent decline in copper inventories. Chinese trade data will be released on Wednesday that is expected to show copper arrivals eased slightly in April. Inflation numbers are due on Thursday and money supply and loan growth expected from Friday. The copper market may have over-reacted on Friday when it soared by more than 6 percent after a strong U.S. jobs report helped fuel hopes that an improvement in the world's largest economy would spur global growth, a London trader said. "We may have done a bit too much on Friday and now people are a bit wary about the Chinese data tomorrow," he said. "We really need to break through $7,400 to make more gains on the upside." Copper touched a session peak of $7,374 on Tuesday, the highest in three weeks, but failed to sustain the higher levels and slipped into negative territory. Three-month LME copper was down 0.6 percent at $7,221.50 a tonne by 1324 GMT. It has lost 14 percent since hitting $8,346 early February, the highest so far in 2013. Last month, copper hit its lowest in a year and a half following weak growth data from China. "The first quarter underperformance of Chinese growth has put many investors on the sidelines. Meanwhile, the new government is looking for long-term rather than short-term solutions," ANZ analysts said in a note. "While we do expect Chinese demand to improve this quarter, the stronger seasonal demand profile may end up being lukewarm." China is the world's top copper consumer, accounting for some 40 percent of overall consumption. Its refined copper imports fell 36.7 percent from a year ago to 218,823 tonnes in March, but the steep fall in London copper prices in mid-April has opened the window for Chinese imports, with benchmark LME copper currently trading at a discount of about $39 to its Shanghai counterpart. "Chinese metals apparent demand has outperformed expectations year to date. The near term could thus see bouts of short covering, but there are growing expectations that Chinese demand will weaken into the second half," said Macquarie in a note. Still, some investors remained heartened by the decline in copper stocks fall in both Shanghai and on the London Metal Exchange. Latest data showed Shanghai stocks at 213,782 tonnes, their lowest since late February, while LME stocks are at 604,600, their lowest since early April, having hit their highest in nearly a decade in late April. "We can expect copper closer to $8,000 a tonne this quarter. There's a lack of scrap especially in China, premiums have increased, there's a backwardation on Shanghai markets, things have tightened up because prices have been so low," said Societe Generale analyst Robin Bhar. He added, however:"This is certainly not the start of a new bull run, it's just a corrective bounce."
Copper Futures Lifted on China Data By Thomson Reuters - Wed 08 May 2013 07:36:59 CT London copper futures edged higher; trading close to a three-week high as strong Chinese data fuelled hopes that an improvement in the world's second biggest economy would spur demand.
On Bloomberg Asia last night (which I highly recommend if you are into commodities), there was talk about an 8% GDP growth for China this year. However, there was also mention of weak construction and building....which supports the short copper idea. Indeed...we are down 4 cents this morning.
Sorry, I meant Cash Flow Australia....with that Aussie blond Aurial. This morning copper is showing signs of decoupling from precious metals as it is holding up despite a nearly 3% drop in gold.
Morning Copper Market Report Fri 10 May 2013 07:12:01 CT Copper prices have come out of a choppy and volatile overnight session with modest early gains. A large portion of the news flow overnight was thought to be supportive, as global equities were generally higher and economic sentiment was mostly positive. More importantly, copper saw declines in two key copper stock levels. The biggest news would seem to be a large weekly decline of 18,739 tons in Shanghai copper stocks, as that could hint at an improvement in Chinese demand. To a lesser degree the copper market might have seen some support from a daily decline in LME copper stocks of 1,500 tons as that would be the 10th decline in the past 14 sessions. However, some traders noted that there was talk overnight of switching from scrap copper supply to fresh metal supply in China, which they felt could go a long way towards supporting copper futures prices above their April lows. --------------------------------------------------------------------------------------------------------------------------------- Commentary: No question there should be a demand boost out of China...they've been holding back purchases for the past 6 months. That accounts for the drop from $3.80 to $3.30 in that time-frame. However, I believe that demand won't last and that once again LME stockpiles will build up again. Once we get out of this eurphoric stage of economic recovery, I think we are going sub-$3.
This has been quite a volatile day for copper on the CME. The intraday price has been jumping all over the place....now up a few pennies.