Copper is rebounding from today’s lows of $2.93, currently on $2.98 finding support from the US -China negotiation news and ease of trade war tension.
Copper has fallen 11% since the January highs and especially 5% since last week on worries about a trade war between USA and the biggest Copper consumer country, China. Copper is the most important cyclical industrial commodity and the strength of its demand has been called into a question after the fears of a slowdown in world growth.
Fundamental Analysis: Copper is the bigger looser
- Copper is the bigger looser during the last geopolitical tensions and the Trade War between US and China. Any escalation of the trade war could see China to lower its growth and lower the demand for Copper.Copper is widely used in construction as well as manufacturing activities and China is the biggest consumer of the red metal, accounting for around 50% of the global demand.
- The appetite of Hedge Funds for Copper has fallen , cutting their net-long position by 28% to 19,800 lots last week,a fresh 16 months low according to the COT report . The price responded negatively to the news that the Chinese Manufacturing PMI has been lowering since last few months and to the increased Copper inventories (stocks) due to low consumption from China since the start of 2018, together with the tariffs tension and trade war fear.
Copper’s technical outlook also began to deteriorate, trading below 200 EMA of $3.02 and testing the multi-months strong support levels of $2.93 where possible break below support level would lead the prices towards $2.80.
Copper would try to rebound from the support level once again and test the $3 resistance point due to oversold RSI conditions and possible ease of the trade war fear.