Weekly copper market review 12/21/2020.
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TECHNICAL ANALYSIS OF COPPER
Last week, COMEX copper futures closed higher at $3.6320 per pound. Copper prices were at highs not seen since February 2013.
Speculative trading is still pushing copper prices, however, net positions in the net commitments of COT traders, after exceeding 80K for the first time, fell slightly last week to 72.12K.
Copper stocks are historically low at 269453 MT, a drop of more than 10% in one week and 16% in December. As can be seen on the stock chart below, total stocks of the red metal are at historically low levels not seen in the last 5 years.
China, the main consumer of copper, is in a phase of accelerated growth, with a recovery in the electronics and automotive exporting sector which has boosted demand for industrial metals.
Figures released last week show that in November the Chinese economy continued to accelerate, a process driven by the recovery in domestic and external demand. Industrial production increased by 7%, the highest rate in 20 months, and investment is supported by government infrastructure programs. Expectations suggest that credit growth and stimulus will continue in 2021, the year for which the IMF forecasts GDP growth of 8.1%.
On the international front, Senate Republican leader Mitch McConnell announced Sunday evening that a $900 billion deal would be reached. The Fed said its purchases of securities would continue at the current rate of $120 billion per month until substantial additional progress has been made. The brexit saga continues, with the European Parliament's Sunday night deadline for a deal passed, but negotiations will continue. No one seems to want to take responsibility for a possible failure. After Pfizer, the FDA also approved Moderna's vaccine. As far as the pandemic is concerned, the vaccination campaign has started in the United States. The new strain of coronavirus detected in Great Britain worries, it would be 70% more contagious. The global death toll is rising, we have just passed 76 million cases worldwide, with more than 1.692 million deaths. The United States is still the most affected country, with 317,000 deaths and more than 17 million cases.
The Dollar fell last week, with the DXY closing lower at 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish.
ECONOMIC RESULTS
- On Monday, industrial production in the Euro zone came out at +2.1% compared to +0.1% the previous month.
- On Tuesday, industrial production was +7.0% compared to +6.9% in the previous month. The Chinese unemployment rate was 5.2%. US industrial production was 0.4% compared to 0.9% the previous month, and the New York FED manufacturing index was down 4.90 compared to 6.30 in October.
- On Wednesday, manufacturing PMI in the Euro zone rose to 55.5% from 53 the previous month. U.S. retail sales declined to -0.9% from -0.1% in October. U.S. manufacturing PMIs were 56.5 compared with 56.7 the previous month.
- On Thursday, inflation in the Euro zone came out at -0.3% in November as expected. U.S. building permits surprise positively up to 1.639M, U.S. unemployment registrations disappoint at 885K, and the Philadelphia FED manufacturing index falls sharply to 11.1 from 26.3 the previous month.
CERTIFIED COPPER STOCKS
- London Stock Exchange copper stocks are down to 123400 MT from 146325 MT last week.
- Copper stocks on the Shanghai Stock Exchange were down to 74222 MT from 82092 MT the previous week.
- Copper stocks on the New York Stock Exchange were down to 71831 MT for 72520 the previous week.
- Total copper stocks were down to 269453 MT compared to 300937 MT the previous week. Total copper stocks are below the five-year average.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week down to 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. The possibilities of reaching an agreement on a contingency plan to support the U.S. economy, as well as the possibility of an economic recovery, are expected to continue.
Disappointing economic results weighed on the currency last week. Indeed, U.S. Retail Sales down to -0.9% and Unemployment Claims up to 885K disappointed.
A low dollar is generally favorable 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 down this week to 72.12 K instead of 80.039 K.
TECHNICAL ANALYSIS OF COPPER
Last week, COMEX copper futures closed higher at $3.6320 per pound. Copper prices were at highs not seen since February 2013.
Speculative trading is still pushing copper prices, however, net positions in the net commitments of COT traders, after exceeding 80K for the first time, fell slightly last week to 72.12K.
Copper stocks are historically low at 269453 MT, a drop of more than 10% in one week and 16% in December. As can be seen on the stock chart below, total stocks of the red metal are at historically low levels not seen in the last 5 years.
China, the main consumer of copper, is in a phase of accelerated growth, with a recovery in the electronics and automotive exporting sector which has boosted demand for industrial metals.
Figures released last week show that in November the Chinese economy continued to accelerate, a process driven by the recovery in domestic and external demand. Industrial production increased by 7%, the highest rate in 20 months, and investment is supported by government infrastructure programs. Expectations suggest that credit growth and stimulus will continue in 2021, the year for which the IMF forecasts GDP growth of 8.1%.
On the international front, Senate Republican leader Mitch McConnell announced Sunday evening that a $900 billion deal would be reached. The Fed said its purchases of securities would continue at the current rate of $120 billion per month until substantial additional progress has been made. The brexit saga continues, with the European Parliament's Sunday night deadline for a deal passed, but negotiations will continue. No one seems to want to take responsibility for a possible failure. After Pfizer, the FDA also approved Moderna's vaccine. As far as the pandemic is concerned, the vaccination campaign has started in the United States. The new strain of coronavirus detected in Great Britain worries, it would be 70% more contagious. The global death toll is rising, we have just passed 76 million cases worldwide, with more than 1.692 million deaths. The United States is still the most affected country, with 317,000 deaths and more than 17 million cases.
The Dollar fell last week, with the DXY closing lower at 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish.
ECONOMIC RESULTS
- On Monday, industrial production in the Euro zone came out at +2.1% compared to +0.1% the previous month.
- On Tuesday, industrial production was +7.0% compared to +6.9% in the previous month. The Chinese unemployment rate was 5.2%. US industrial production was 0.4% compared to 0.9% the previous month, and the New York FED manufacturing index was down 4.90 compared to 6.30 in October.
- On Wednesday, manufacturing PMI in the Euro zone rose to 55.5% from 53 the previous month. U.S. retail sales declined to -0.9% from -0.1% in October. U.S. manufacturing PMIs were 56.5 compared with 56.7 the previous month.
- On Thursday, inflation in the Euro zone came out at -0.3% in November as expected. U.S. building permits surprise positively up to 1.639M, U.S. unemployment registrations disappoint at 885K, and the Philadelphia FED manufacturing index falls sharply to 11.1 from 26.3 the previous month.
CERTIFIED COPPER STOCKS
- London Stock Exchange copper stocks are down to 123400 MT from 146325 MT last week.
- Copper stocks on the Shanghai Stock Exchange were down to 74222 MT from 82092 MT the previous week.
- Copper stocks on the New York Stock Exchange were down to 71831 MT for 72520 the previous week.
- Total copper stocks were down to 269453 MT compared to 300937 MT the previous week. Total copper stocks are below the five-year average.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week down to 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. The possibilities of reaching an agreement on a contingency plan to support the U.S. economy, as well as the possibility of an economic recovery, are expected to continue.
Disappointing economic results weighed on the currency last week. Indeed, U.S. Retail Sales down to -0.9% and Unemployment Claims up to 885K disappointed.
A low dollar is generally favorable 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 down this week to 72.12 K instead of 80.039 K.
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