Monthly Copper Price Index Drop Is No Surprise; Forecast Stays Bearish

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The LME 3-month primary copper price tanked 4.2 percent over the past month, from $7,370 to $7,061 per metric ton – which, to us, came as no surprise.

The monthly copper price index registered a value of 89 in February, a decrease of 3.3 percent from 92 in January:

historical copper price index chart

Since copper started the month of January trading near resistance levels, it followed that prices were likely to come back down, as we stated in our last Copper MMI®.

Copper Price Outlook: Technical Analysis

LME Copper Historical Prices From 2013

Source: LME data, MetalMiner analysis

MetalMiner now forecasts copper prices.

So what’s likely to happen to copper prices going forward?

As copper has been moving sideways during the last months, it might gain support again within the very near term.

My colleague Stuart wrote recently, “In the short term, the copper supply squeeze remains. Not counting short-term sentiment, driven by a stronger dollar, and reductions in the Fed’s quantitative easing, cash copper prices particularly could remain supported around current levels for a while.”

Either way, we still think that copper won’t go well above $7,500 per metric ton. Unless that happens, we remain bearish on copper.

What the Markets Say

Apart from the study of price action through technical analysis, a global view of the financial markets strengthens our bearish view on copper. The two main factors pushing industrial metal prices down don’t seem willing to help copper to come back up.

What This Means For Metal Buyers

The performance of copper over the month of January only helped to confirm our bearish view. Until the market gives new signals, it doesn’t seem to us that taking long positions would be the best way to go for copper buyers.

Key Price Drivers

After rising the previous month, US copper producer grade 110 prices dropped 5.3 percent. US copper producer grade 102 prices fell 5.1 percent.

* Get the complete prices every day on the MetalMiner IndX℠

After rising the previous month, copper 3-month prices dropped 4.2 percent on the LME to $7,062 per metric ton. Primary cash copper prices fell 4.0 percent on the LME to $7,090 per metric ton after rising the previous month. Japanese primary cash copper prices dropped 3.3 percent. Chinese primary cash copper prices fell 2.5 percent, while Chinese copper wire drifted 1.8 percent lower.

The price of Chinese bright copper scrap rose 1.9 percent after falling the previous month. Meanwhile, Korean copper strip experienced a flat month.

Don’t forget to read January 2014 MMI analysis before February’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.