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

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November 2019 | Base Metals


Copper: More to come from the Q4 uptrend


LME Week 2019 revealed only a cautiously optimistic sentiment toward the base metals. In line with most market participants, we view the fundamental backdrop of the global copper market as tight and the chief driver behind the weakness in prices so far this year is primarily the lingering US-China trade frictions. We expect a tactical rebound in the copper price in Q4, underpinned by additional short-covering on improving macro dynamics, especially if refined market conditions tighten anew.

Rebound in Q4, in line with expectations
The LME copper price has rebounded by nearly 2% since the start of October, corroborating our expectations for a rebound in Q4. This has been primarily driven by increased optimism for a US-China partial trade deal as well as renewed weakness in the dollar. From a positioning vantage point, the speculative community has begun to normalize its excessively bearish positioning since late August. We estimate that specs are presently 48% short Comex copper, versus a maximum short position at the start of September. This suggests plenty of room for additional short-covering/fresh buying.

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