Do ETF Outflows Signal Copper Price Movements on Monthly Index?

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copper price index trends chart november 2013

The monthly Copper MMI® registered a value of 91 in November, on par with October’s value.

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In many respects, copper is Alfred Hitchcock’s “Psycho”! On the one hand, the metal reacts to the whims of the market (which we will come to in a moment). And on the other hand, copper prices react to actual supply and demand.

First, the market.

Though we tend to write with the manufacturing community in mind (as opposed to the investment community) when analyzing copper, we like to turn to the world of finance because it helps to explain some of copper’s price movements. Take for example this piece, examining 13 sources of market volatility. Obviously, not all apply to copper, but some of them do. In particular, we track the following: US advanced GDP, China industrial production, China inflation, whether Fed Chairman Ben Bernanke speaks, and China’s trade balance (to name a few examples). These and more impact the day-to-day prices of copper.

Furthermore, as my colleague Raul de Frutos recently wrote, ETF outflows and in particular, recent copper outflows suggest that many investors have some bearish sentiment regarding copper prices. And in fact, as recently as October 24, many analysts as well as market participants thought copper prices would fall by 8 percent by the end of the year.

For those that prefer to look at copper through the lens of supply and demand fundamentals, one might come to the same conclusion as the investment community – supply seems strong, and some might argue we will actually have a refined metal surplus next year.

We remain skeptical though and will continue to watch this basket of metals very closely.

Find out more about MetalMiner’s copper price forecasting capability to help your metal sourcing efforts.

The Japanese copper cash price rose 0.9 percent after falling the previous month.

Chinese copper wire prices fell 1.4 percent after rising the previous month. Also, after rising the previous month, Chinese primary cash copper prices dropped 1.3 percent. Primary cash copper prices fell 0.8 percent on the LME to $7,233 per metric ton after rising the previous month. After rising the previous month, copper 3-month prices dropped 0.8 percent on the LME to $7,240 per metric ton.

Korean copper strip experienced a flat month. Prices for the price of US copper producer grade 102 remained constant this past month. The price of US copper producer grade 110 also held pat last month. Chinese bright copper scrap moved up a little bit but essentially remained unchanged.

Don’t forget to read the October 2013 MMI analysis before November’s full report comes out next week!

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.