Copper One Of The Major Underperformers,Selling Recommended
CommodityOnline | Apr 21, 2014 05:21AM ET
Copper had been one of the major underperformers among base metals in 2014, having declined over 10% and during the past week, it closed near the $6650 / MT mark. It was lower last week as well having declined over $20 from its previous close. Overall, major reason behind fall in past week and recently had been the Chinese economic growth. China released its GDP andindustrial production numbers which just managed to stand in-line with estimate though monetary growth number disappointed. By looking at the equity market performance last week Chinese Shanghai equity index declined over 1.50% while rest of the world traded on a positive note.
When we look at the inventory numbers, commodity stocks at LME are hovering near multi-year low at 0.242 million tons. Stocks at SHFE too declined lately though imports for the metal have been steady to positive in last couple of months. There are concerns over copper’s role in China as collateral for bank loans and other financing. IG market strategist Evan Lucas believes as much as 60% to 80% of China’s copper imports have been used as collateral against bank loans. While actual demand for the metal is missing its strong growth period seen in previous years and global supply to persistently rising, we feel Copper prices might continue to remain under pressure in near term. For the day, while activity might remain muted, we recommend selling on higher levels for small targets.
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.