All That Investors Need To Know About LME Copper – Is There Any Growth For The Red Metal?

All That Investors Need To Know About LME Copper - Is There Any Growth For The Red Metal?

Copper prices surged amid U.S-China trade talks and over the building optimism among market participants. The ongoing trade talks provided an impetus to the copper prices, as a plunge in the trade war convinced market participants over the betterment in the global economy. The LME copper futures started a rally from $5727.00, which marked a day’s low on 3rd January 2019 and made a high of $6539.25 on 25th February 2019. The February month high of $6539.25 marked a 6-month high. Another factor supported the copper rally was decreasing inventories on London metal exchange.

Recently, copper prices took a correction and dipped to $6469.75 and the LME copper futures prices are currently moving in a narrow range of $6506—$6449. The sluggish movement in the copper prices is mainly due to the upcoming economic data from China and U.S.A. The monthly China Manufacturing PMI, which marked a level of 49.5 in January was better than the December manufacturing PMI of 49.4.

The betterment in manufacturing sector coupled with falling inventories supported the copper prices. The market participants are waiting for the upcoming Manufacturing PMI and monthly Caixin Manufacturing index, which was reported at 48.3 for the month of January 2019, down, as compared to 49.7 in the month of December 2018. The market participants are expecting the Caixin index to rise and mark a level of 48.7 for the month of February 2019.

Any rise in both Manufacturing PMI Index and Caixin Manufacturing Index, which will bring them close to their mean value of 50 will further indicate the expansion in China economy and in turn may support the copper prices. The market participants are waiting for the cards to unfold on both the data. The Manufacturing PMI is due on 28th February 2019 and Caixin Manufacturing PMI is due on 1st March 2019.

The ISM monthly Manufacturing Index, which gauge the level of manufacturing activity in U.S, reported at 56.6 for the month of January 2019, as compared to 54.1 reported for the month of December 2018.

The jump in the ISM manufacturing Index to 56.6 in the month of January supported the copper prices. However, the market participants are waiting for the data to get revelled, which is due on 1st March 2019. The market participants are expecting the value to touch a level of 56 for the month of February, lower than the previous value of 56.6, but above from the mean value of 50. The February ISM manufacturing PMI above the mean of 50 and in line with market expectation may support the copper prices and a fall below the mean or market expectation can exert pressure on copper prices.

The copper sluggish movement is justified, as market participants have adopted a policy of wait and watch. Along with all the above mention economical indicators, market participants will keep a hawk on the depleting LME inventories and any move taken by producers to replenish the lost inventories.


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