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

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August 2019 | Base Metals


Copper: Excessively negative positioning set to reverse


Whether the recent stabilization in copper prices will last in the very near term remains uncertain given the presently unfriendly momentum. However, we continue to argue that market participants are positioned too negatively in copper, overlooking a possible acceleration in Chinese copper demand in the near term and structurally tight refined market conditions in the longer term. As such, we maintain that a wave of short-covering is likely to occur by year-end, most probably after the end of the traditionally slow summer months, which would push prices firmly higher.

Fresh buying picks up
Copper, which made a gain of nearly 1% last week, enjoyed some fresh buying judging by a rise in LME open interest. The rebound was in part technically driven because the sell-off of 4.1% in the LME copper price in the prior week resulted in oversold conditions. As the market is no longer oversold, renewed weakness in the immediate term cannot be ruled out.

The rebound was also led by (1) a weaker dollar (DXY: -1% last week) on more Fed easing expectations in response to increased US-China trade tensions, and (2)...

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