Monthly Copper MMI® Falls 11.4%, Don’t Catch A Falling Knife

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The monthly Copper MMI® registered a value of 70 in February, a decrease of 11.4% from 79 in January.

Copper_Chart_February-2015_FNL

Yes, you read it right, a more than 11% drop in a month. Did we predict copper falling 11% in January? Heck, no! But, did we tell you not to buy? Yes, we did, my friend. What we said last month:

“Copper prices might look like a bargain, but, in a falling market, what seems cheap can become way cheaper. Stay with the trend.”

Compare with last month’s copper MMI®.

Most buyers just can’t resist a bargain, and they will buy at “bargain price” and hold inventory. But, the commodity market works differently. Metals that seem too high in price tend to go higher while weak metals that fall tend to go lower. Buying forward when your metal price is falling is like trying to catch a falling knife: you’ll get hurt, almost every time.

So, in a falling market, buyers have two options:

A. Buy on weakness as market pundits will often recommend buying after a big drop (catch that falling knife).

B. Follow the trend and buy down the market as long as prices keep falling, and buy on strength when there are clear signs that the downtrend has ended.

Last week, copper rose modestly. This is a normal short-term reaction after a big drop as short sellers have to cover positions. But, at this point, nothing indicates that this bear copper market is over.

If you’d like to understand when is the right time to buy copper, take a free trial.

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

At $5,366 per metric ton, Chinese bright copper scrap was down 16.8% for the month. The Japanese copper cash price fell 15.7% over the past month to $5,689 per metric ton. Following a 13.1% decline in price, Chinese copper wire finished the month at $6,462 per metric ton. The Chinese copper cash price declined 13.1% over the month to $6,612 per metric ton. A 13.0% drop on the LME left the cash price of primary copper at $5,500 per metric ton. After falling 12.9%, the 3-month price of copper finished the month on the LME at $5,460 per metric ton. A 8.5% drop left the price of US copper producer grade 110 at $3.24 per pound. Following a 8.0% decline, the price of US copper producer grade 102 reached $3.43 per pound. The value of Korean copper strip weakened by 1.7% this month, settling at $8.62 per kilogram.

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.

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