The monthly Copper MMI® registered a value of 75 in April, an increase of 2.7% from 73 in March.
The suspicious copper rally is still in place. Copper has rallied as much as 17% since it hit its trough in February. The move might seem impressive for the non-trained eye, but copper is just zigzagging.
Copper's Selling, But We're Not Buying
After the huge drop during the second half of last year, we believe that there is no point in freaking out over this two-month rally. Picking bottoms is very hard and definitely not a good strategy for metal buyers. Was February the bottom of copper's bearish market? Nobody knows. But we do know that trying to guess what was the bottom is a terrible strategy to take with copper since 2011. Prices have kept on falling, trough after trough... after trough.
In the fundamentals side, we don't see any game-changing factor that could drive a significant upturn in copper prices. The market remains far from being in deficit and the macroeconomic outlook from China remains poor. Copper demand is lacking momentum.
Now, with the fundamental picture being dormant, at best, can we expect copper prices to rise above last year's levels? That seems very unlikely. Especially while a strong dollar and low oil prices are having a depressing effect on commodities, and many other base metals are making record lows.
Before copper is ready to turn around, we'll have to see more price strength changes in the demand outlook and commodity markets. Both need to turn upward. We believe that the last four years gave copper buyers reasons enough to wait for real signs of strength before making large volume commitments.