My take is that the price action in light of the declining inventories has been very weak on the upside. Indeed, we are down 3 pennies today....and I don't think it's because of the USD. Finally, what happens when inventories STOP going down ?
Copper is already near a low, so what are chances copper hits *new* low with a) low inventories and b) recovering economy. Put those two together, plus price momentum, and you have more higher prices.
re: low inventories - as I mentioned in a prior post, there is so much "off-the-books" of horded copper, it's not even funny. Once those players see the price going down, they're gonna dump it fast. re: recovering economy - are you talking the USA ? It doesn't consume half the copper of China. And, oh by the way, China is not really recovering from it's previous torrid growth rate. https://www.mapi.net/copper-consumption-country-and-industry China dwarfs North America by 4:1 and Western Europe 3:1. If China slows, look out below.
Copper hits near 2-week low on LME on China fears LONDON--Copper futures fell to their lowest level in almost two weeks on the London Metal Exchange Monday, weighed by concern over demand for the metal from top consumer China. The LME's flagship three-month copper contract fell 0.5% to $7,278.75 a metric ton in early trade, its lowest price since Dec. 24. A weak batch of Chinese economic data last week rattled base metal investors, who took the data as a sign of weaker demand for industrial metals in the country. China is the world's No. 1 copper consumer, accounting for around 40% of global demand for the metal. "Evidently, we are still seeing the after-effects of the Purchasing Managers' Indices in China which were published last week and fell in December," said Commerzbank. Base metal prices could find support in the days ahead from the annual reweighting of major commodity indices such as the Dow Jones-UBS Commodity Index and the Standard & Poor's GSCI, however. The reweighting process leads investors and funds who track the indices to generally sell last year's outperformers and buy underperformers to bring the composition of their portfolio back into line. For base metals like copper, which fell 7.2% last year, this process "is likely to spark buying," said Commerzbank. In other base metals Monday, aluminum was down 0.5% at $1,783.50 a ton, zinc was 0.5% lower at $2,016.50 a ton, nickel was 1.5% lower at $13,632 a ton, lead was 0.7% at $2,161 a ton and tin was down 0.9% at $21,310 a ton. --------------------------------------------------------------------------------------------------------------------------- Commentary: We would be way down if inventory / stock levels weren't so low. March CME contract only down 1 penny to 3.345. Of course it was as high as 3.40 as recently as last week.
Copper down huge today despite very low stock levels at the LME (351,000 tons). All contract months on the CME are down about 5 cents. Copper miner index (COPX) continues to plunge as well...now under 9. The USD is flat, so this move is not currency-related.
Copper UP 4 pennies this morning. USD flattish. However, ONCE AGAIN, LME stock levels are lower...now at 348,250 metric tons. Rock 'n roll boyz.....this is getting pretty crazy.
With automakers' demand for aluminum growing explosively as they seek to improve fuel efficiency, aluminum providers are selling out their automotive capacity almost as fast as they can build new plants, raising the question of whether some car makers could be caught short in the future. The U.S. market for aluminum sheet is expected to be up fivefold this year from 2012 with the development of vehicles like Ford Motor Co's (NYS:F) next generation F-150 full-size pickup truck, a more aluminum intensive model that will be shown Monday at the Detroit auto show. http://www.chicagotribune.com/class...-us-autoshow-aluminum-20140110,0,550823.story
Here is one of the most in-depth analyses of the copper market: http://www.futuresmag.com/2014/01/1...one?eNL=52d035ecdd9aa4556f00014b&_LID=1117742 Bottomline: Quite a bull-bear struggle.
Stock levels remain tight on the LME. Why ? Who knows !! 336,825 metric tons Prices up a bit today...not much.
Copper down 2+ cents on the CME despite continued low LME stockpiles and somewhat constructive news out of China. Go figure.