Copper: Chinese Imports Fuel Fresh Rally
Copper prices surged to fresh highs again this week, marking their highest levels in nearly four years as a combination of factors propelled the red metal higher. Firstly, reports of a boom in Chinese imports fuelled a positive reaction. Chinese imports of copper rose 8.3% in July, showing a year over year increase, though cargoes showed declines of 15% from a year ago, over the first seven months of 2017. Copper deliveries in September jumped to 2.9455 per pound, up a further 1% from last week’s close and marking the highest levels since mid-December 2014.
After falling over 50% to six-year lows in January of last year, copper has since put in a 16% rally this year. Shipments of copper concentrate remain at the same levels in July at 2.2% year over year. Adding further support for the metal is the reported extension of the workers’ strike at the Grasberg mine in Indonesia run by Freeport McMoRan. The strike has now been extended for a fourth consecutive month to end in August though traders are wary of the likelihood of a further extension.
The decline in the US Dollar over the year has been particularly helpful for copper demand also which remained firm this week despite a small recovery rally. Concerns about inflation in the US are fuelling a repricing of the Fed funds rate path over the remainder of the year while political uncertainty around Trump’s policy agenda is also weighing on the Greenback.
After breaking out above the former 2017 high, the expansion in copper has taken price up to challenge key resistance at the confluent area between the 2015 swing high and the bearish long term, trend line from 2011 highs. This is a key area for the price with a break here signalling the room for further appreciation. If copper prices fall back from here the prior 2017 high around 2.760 should provide support with the rising short-term channel base coming in around that area also.
Read more: https://www.orbex.com/blog/2017/08/weekly-commodities-wrap-copper-rally-continues-now-16-in-2017/