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

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May 2019 | Base Metals

Copper: Focus on Chinese demand

The LME copper price has come under pressure since the start of May, in line with our expectations. Two factors are driving the copper weakness: the lack of seasonal improvement in demand (especially in China) and macro tensions stemming from a renewed escalation in the US-China trade dispute. Should these two forces prevail – and we think they will for the rest of the month at least – copper prices should continue to experience weakness.

US-China trade tensions re-emerge
Last week proved to be challenging for copper and wider base metals complex – although the dollar depreciated slightly, risk-off mood surged due to rising trade tensions ahead of the implementation of the US tariff increase on Chinese goods last Friday (May 10). Chinese equities tumbled (-4.5%) and the yuan depreciated against the dollar at the fastest pace since June 2018, which produced a negative copper demand shock.

Copper’s positioning turns bearish

Copper’s spec positioning has become more bearish since the start of May – the latest CFTC data show that non-commercials reduced their net length from...


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