Investing.com - Financial Markets Worldwide

Copper One Of The Major Underperformers,Selling Recommended

ByCommodityOnline
Published 04/21/2014, 05:21 AM
Updated 05/14/2017, 06:45 AM



Copper had been one of the major underperformers among base metals in 2014, having declined over 10% and during the past week, it closed near the $6650 / MT mark. It was lower last week as well having declined over $20 from its previous close. Overall, major reason behind fall in past week and recently had been the Chinese economic growth. China released its GDP andindustrial production numbers which just managed to stand in-line with estimate though monetary growth number disappointed. By looking at the equity market performance last week Chinese Shanghai equity index declined over 1.50% while rest of the world traded on a positive note.

When we look at the inventory numbers, commodity stocks at LME are hovering near multi-year low at 0.242 million tons. Stocks at SHFE too declined lately though imports for the metal have been steady to positive in last couple of months. There are concerns over copper’s role in China as collateral for bank loans and other financing. IG market strategist Evan Lucas believes as much as 60% to 80% of China’s copper imports have been used as collateral against bank loans. While actual demand for the metal is missing its strong growth period seen in previous years and global supply to persistently rising, we feel Copper prices might continue to remain under pressure in near term. For the day, while activity might remain muted, we recommend selling on higher levels for small targets.

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