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Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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January 2019 | Base Metals


Copper: Most downside risks already discounted


After a disappointing 2018 the current copper price may have already discounted most downside risks. Since we expect the macro backdrop to turn friendlier as H1 2019 progresses – on more policy easing and stimulus in China and de-escalation in the US-China trade dispute – the healthy fundamentals of the copper market should reassert themselves.

Copper supported by PBOC and the Fed
While copper started the year on a poor note after China’s manufacturing activity declined last month for the first time since 2016, the red metal rebounded by nearly 3% on Friday after China’s PBOC announced a 1% cut in the reserve requirement ratio (RRR) ahead of the Lunar New year. This marks the first cut in RRR after four last year. This resulted incidentally in a 2% rally in the Shanghai Composite Index.

Further, Friday’s rally in copper was reinforced by some dovish rhetoric from Fed Chair Powell,...

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