Base Metals And Copper Hit By Weak Chinese Data
Anna Coulling | Oct 14, 2016 05:59AM ET
The rally for copper finally came to an abrupt halt yesterday as weak economic trade data news from China dealt the base metal a mortal blow. Copper was sent plunging lower and closed the session with the wide spread down candle on very high volume, and signaled the end of September's rally.
The red metal was also doubly hit as China’s copper imports fell to their lowest level since 2015, with both zinc and lead falling sharply in tandem. It is against this backdrop that Chile’s regulators are currently preparing to bring charges against one of the largest copper mines in the country for the alleged mismanagement of water resources. If duly proved, this could result in its possible closure and consequent impact on supply.
Ironically for China, the PPI data revealed a pickup in prices, driven largely by increasing commodity prices with a consequent tickup in inflation data coupled with consumer prices. This is some slightly more encouraging news for the word’s second largest economy.
From a technical perspective the rally for copper failed to find any meaningful traction through the $2.22 lbs area, running into stiff price congestion above, and oscillation around the volume point of control in the $2.18 lbs area. Resistance in the $2.200 lbs added further downwards pressure. Yesterday’s price action also breached potential support in the $2.14 lbs area. With a low volume node below, we could see further downside pressure with a move back to test the lows of September in the $2.080lbs area in due course.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.