Copper Drops to Four-Year Low in London on Slowing China Growth
This article by Joe Deaux and Agnieszka de Sousa for Bloomberg may be of interest to subscribers. Here is a section:
China’s industrial profits fell the most in more than two years last month, according to National Bureau of Statistics data published last week. A private report scheduled for later this week is expected to show manufacturing in the country contracted. The London Metal Exchange resumed trading today after a two-day holiday.
“The international picture hasn’t been great, the growth story out of Asia is not robust,” Timothy Evans, the chief market strategist at Long Leaf Trading Group Inc. in Chicago, said in a telephone interview. “It’s amazing how copper so accurately predicts what economic activity will look like globally.”
This morning’s two-second bear raid on copper highlights just how active automated programs remain in the commodity markets.
From a medium-term perspective the large banks are selling off their warehouses and closing trading operations but open interest in the front month of Comex copper is at five year highs. This suggests that while big investment banks are exiting the market, their place is being taken by private trading houses and automated programs. This leaves the market more susceptible to intraday volatility and temporary price swings.
Copper pricing remains under pressure and the additional weakness in the oil
complex will act as a further headwind. A sustained move above $3 would be required to question medium-term type-3 top formation completion.