Copper Falls On Weak China Data
Soft China Data
Copper prices have fallen back from initial highs on the session as traders digest the latest data from China overnight. Sevel readings were seen undershooting forecasts, raising the prospect of weaker demand for copper. Fixed asset investment, industrial production and retail sales were each seen coming in below forecasts while the unemployment rate was seen rising to 5.2% from 5% prior, above the 5% the market was looking for.
China Copper Premium Reduces
This data comes on the back of the recent drop in the Yangshan premium, which reflects the excess paid for China imports against the LME. That premium recently dropped back under $100 having been as high as $115 last month. Despite this, the broader outlook for copper remain bullish given the ongoing concerns over tighter supply levels as a result of falling production in Chile and ongoing demand increases across multiple sectors including renewable energy, electric vehicles and more recently the AI sector. As such, the current weakness in copper is not expected to last and with the US Dollar undergoing a correction, we could start to see metal prices rising this week. In particular, if Wednesday’s FOMC minutes act as a catalyst for additional USD selling this could give copper a platform to return to highs.
Technical Views
Copper
The rally in copper has stalled for now into the 6.7190 level with price briefly piercing above the level before calling back. Momentum studies have cooled too, suggesting room for a further correction lower near-term. With the market still in a longer-term bull channel, however, focus is on a continuation higher while price holds above the 6.1090 level.
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