Copper Recession Fears Easing – Commerzbank

Copper continued to gain last week, although it gave back some ground this morning. A brighter global economic picture prevailed last week. Markets have moved past the turmoil caused by the weak US employment report from earlier in the month and are now pricing in an environment of weaker growth but not recession. This helps cyclic sensitive copper. Earlier this week, more details on Chinese foreign trade also helped, notes Commerzbank currency analyst Volkmar Baur.

Copper continues to gain

“During the rally, Copper managed to ignore the news that a strike at the world’s largest copper mine, Escondida in Chile, had been resolved after only a few days. The mine alone accounts for around 5% of the world’s copper ore supply and has often been the scene of lengthy strikes in the past.”

“In July, exports of unwrought copper and copper products were again significantly lower than the previous month. At around 141,000 tonnes, they are still very high, but also well below the previous month’s record high of 233,000 tonnes. After two months of rapid gains, the decline eases concerns that China is dumping more and more copper on the world market due to weak domestic demand.”

“This week’s flash estimates for manufacturing PMIs from advanced economies will be key as they have trended lower in recent months. In addition, the International Copper Study Group’s monthly report should provide insight into the extent to which the copper market remains oversupplied.”