Weekly copper market review 12/07/2020.
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TECHNICAL ANALYSIS OF COPPER
Last week, COMEX copper futures closed higher at $3.5245 per pound.
Speculative trading is pushing copper prices higher, as net positions of the net commitments of traders at +79K are at historical highs.
Copper stocks are historically low at 320691 MT.
China, in November, developed at the fastest pace in 10 years,
exceeding expectations. Currently, the manufacturing sector in the country is the main driver of copper demand worldwide. The increase in appliance sales, caused by the containment and rebound in car and truck production, has reactivated the manufacturing sector and led to the consumption of industrial metals such as steel, copper and aluminum. The relative scarcity of the red metal has pushed industrialists to accumulate copper stocks to face a possible 2nd wave in producing countries such as Chile or Peru. Caixin's manufacturing PMIs stood at 54.9 in November, exceeding expectations and expanding for the 7th consecutive month.
Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking through the resistance of the 92, is moving towards the 90's, and the Euro approached $1.22 after disappointing US empoys figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline.
Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy has passed the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases in 24 hours on Saturday. The United Kingdom, the first country to authorize Pfizer vaccine, begins vaccination on Tuesday.
ECONOMIC RESULTS
- Last week was rich in results. Manufacturing PMIs all showed an increase, in China they stood at 52.1 in November against 51.4 in October, in the Euro zone they stood at 53.8 in November against 53.6 in October, in the US they rose to 56.7 in November against 53.4 in October. US job creation disappointed, falling to 245K against 610K the previous month. Orders to US industry were up 1.0% compared to 1.3% in October.
- On Monday, Chinese exports rose by 21.1% in November and imports fell by 4.5%.
- Tuesday, GDP in the Euro zone, the ZEW index of economic sentiment.
- Wednesday, inflation and producer prices in China.
- Thursday, inflation and U.S. unemployment registrations.
- Friday, U.S. producer prices and Michigan consumer confidence index.
CERTIFIED COPPER STOCKS
- London Stock Exchange copper stocks are down to 149675 MT from 150775 MT last week.
- Copper stocks on the Shanghai Stock Exchange rose to 97783 MT from 92912 MT the previous week.
- Copper stocks on the New York Stock Exchange were down to 73233 MT for 74019 the previous week.
- Total copper inventories increased to 320691 MT compared to 317706 MT the previous week. Total copper stocks are below the five-year average.
THE DOLLAR
The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply.
A low dollar is generally good for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The net speculative position on the copper futures markets is up this week to 79.856 K instead of 73.771 K.
TECHNICAL ANALYSIS OF COPPER
Last week, COMEX copper futures closed higher at $3.5245 per pound.
Speculative trading is pushing copper prices higher, as net positions of the net commitments of traders at +79K are at historical highs.
Copper stocks are historically low at 320691 MT.
China, in November, developed at the fastest pace in 10 years,
exceeding expectations. Currently, the manufacturing sector in the country is the main driver of copper demand worldwide. The increase in appliance sales, caused by the containment and rebound in car and truck production, has reactivated the manufacturing sector and led to the consumption of industrial metals such as steel, copper and aluminum. The relative scarcity of the red metal has pushed industrialists to accumulate copper stocks to face a possible 2nd wave in producing countries such as Chile or Peru. Caixin's manufacturing PMIs stood at 54.9 in November, exceeding expectations and expanding for the 7th consecutive month.
Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking through the resistance of the 92, is moving towards the 90's, and the Euro approached $1.22 after disappointing US empoys figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline.
Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy has passed the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases in 24 hours on Saturday. The United Kingdom, the first country to authorize Pfizer vaccine, begins vaccination on Tuesday.
ECONOMIC RESULTS
- Last week was rich in results. Manufacturing PMIs all showed an increase, in China they stood at 52.1 in November against 51.4 in October, in the Euro zone they stood at 53.8 in November against 53.6 in October, in the US they rose to 56.7 in November against 53.4 in October. US job creation disappointed, falling to 245K against 610K the previous month. Orders to US industry were up 1.0% compared to 1.3% in October.
- On Monday, Chinese exports rose by 21.1% in November and imports fell by 4.5%.
- Tuesday, GDP in the Euro zone, the ZEW index of economic sentiment.
- Wednesday, inflation and producer prices in China.
- Thursday, inflation and U.S. unemployment registrations.
- Friday, U.S. producer prices and Michigan consumer confidence index.
CERTIFIED COPPER STOCKS
- London Stock Exchange copper stocks are down to 149675 MT from 150775 MT last week.
- Copper stocks on the Shanghai Stock Exchange rose to 97783 MT from 92912 MT the previous week.
- Copper stocks on the New York Stock Exchange were down to 73233 MT for 74019 the previous week.
- Total copper inventories increased to 320691 MT compared to 317706 MT the previous week. Total copper stocks are below the five-year average.
THE DOLLAR
The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply.
A low dollar is generally good for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The net speculative position on the copper futures markets is up this week to 79.856 K instead of 73.771 K.
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