The monthly Copper MMI® registered a value of 73 in July, a decrease of 2.7% from 75 in June.
Copper suspiciously rallied in the first quarter, gaining almost 20% from trough to peak.
However, copper prices fell again in May and June and those previous gains have almost vanished. The copper rally was always suspect at best.
Chinese Construction Feeding the Bear
The bearish commodity market is definitely not encouraging investors to pour money into copper. Another big factor that doesn't help to lure investors into copper is weak Chinese demand for the metal. The latest Chinese numbers show poor demand from key sectors:
- In the first five months of current year, real estate development firms purchased 76.50 million square meters of land, a year-over-year (YoY) decline of 31%. The floor space of completed buildings declined 13.3% YoY as of May. Finally, Chinese real estate firms have started construction on only 503 million square meters as of May, falling 16% YoY.
- A lower growth rate in China's automobile sector also hits copper's demand. China’s passenger car sales only grew by a mere 1.2% YoY in May, sliding 3.6% from the previous month.
Meanwhile in May, China produced 0.65 million tons of refined copper, a 6% YoY increase.
What This Means For Metal Buyers
The latest figures don't give investors reason to think that copper's fundamentals are set to tighten up and, overall, the market sentiment on commodities is bearish. We shouldn't expect copper to make significant upside moves.
The Copper MMI® collects and weights 12 global copper metal price points to provide a unique view into copper price trends over a 30-day period. For more information on the Copper MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.