Why We Still Don’t Buy This Two-Month Copper Rally

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The monthly Copper MMI® registered a value of 75 in April, an increase of 2.7% from 73 in March.

Copper_Chart_April-2015_FNL

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 zigzagging down since 2011

Copper zigzagging down since 2011. Source: MetalMiner.

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. Since 2011, we do know that trying to guess the bottom is a terrible strategy to take with copper. Prices keep falling from trough to trough… to trough.

On 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 a deficit and the macroeconomic outlook from China looks poor. Copper demand lacks momentum.

Now, with the fundamentals picture 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 and changes in the demand outlook for 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.

 Actual Copper Prices

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

It was a strong month for the cash price of primary Japanese copper. The metal posted a 4.0% increase, finishing at $6,315 per metric ton. Following a 3.1% upswing on the LME, the copper 3-month price closed the month at $6,020 per metric ton. After a 2.9% increase on the LME, the primary copper cash price finished the month at $6,050 per metric ton. Chinese copper wire saw its price rise 1.2% to $7,002 per metric ton. The cash price of Chinese copper inched up 1.2% to $7,174 per metric ton. The price of US copper producer grade 110 rose a slight 0.9% over the past month to $3.46 per pound. The price of US copper producer grade 102 increased 0.8% to $3.65 per pound.

Korean copper strip prices decreased by 0.8% this month, ending at $7.77 per kilogram.

Chinese bright copper scrap traded sideways last month, staying around $5,385 per metric ton.

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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