China Stimulus
Copper prices are on watch this week after fresh stimulus measures were announced in China over the weekend. The government announced a ‘special action plan’ on Sunday, aimed at boosting domestic consumption including plans to bolster incomes and subsidise childcare. The move has been announced in response to a recent squeeze in consumer demand over recent years but and is feeding into better demand expectations for the copper market. Additionally, better-than-forecast data overnight has helped feed into bullish sentiment. Industrial production was seen at 5.9% YoY, above the 5.3% the market was looking for, though down slightly from the prior 6.2% reading.
Tariff Focus
Focus this week is also back on Trump following recent threats to apply tariffs directly to copper imports. While tariffs are typically bearish for the commodities they’re applied to, the current demand squeeze on copper means that tariffs could actually boost prices further. The copper market is currently facing a bottleneck amidst issues in its supply chain linked to ageing sites, and decommissioned mines. Against this backdrop, Trump’s drive to bolster domestic production could see copper prices driven higher as domestic smelters in the US struggle to satisfy demand given that the US imports almost half its copper supply.
Technical Views
Copper
The breakout in copper has stalled for now and bearish divergence in momentum studies suggests the risk of a reversal lower. However, while price holds above the 4.8010 level, focus remains on a continuation higher with 5.12 the next objective for bulls. Should price slip lower from here, 4.5785 is the next support to note.
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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.