LOOK AT THE FUNDAMENTALS

The rally in the price of copper gained momentum on Monday after trade data showed Chinese imports of refined metal rebounding and concentrate shipments setting a fresh all-time high.

China consumes half the world’s copper, and trade data released on Sunday showed the country’s imports of unwrought copper increased to the highest since September 2018. Shipment totalled 483,000 tonnes in November, nearly 6% higher than the same month last year.

For the first 11 months of 2019, imports of unwrought copper are still down 8.5% from a year earlier at 4.45 million tonnes. Last year China imported a record 5.3m tonnes of refined copper.

Copper stocks in warehouses in China have been declining since June and were at 245,500 tonnes at the end of last month, the lowest since at least June 2013, according to Refinitiv Eikon data.

Imports of copper concentrate continued to rise sharply, up 27% from a year ago to a new record of 2.16m tonnes last month. November cargoes boosted year-to-date volumes to 20.1 million tonnes, a gain of just over 10% compared to the first 11 months of 2018. Concentrate imports are already above the record set in 2018 of 19.7m tonnes.

China put in place a complete ban on certain types of scrap copper imports at the start of 2019 on top of a 25% tariff on imports from the United States, one of its main suppliers, instituted in August.

Smelter expansions have increased demand and competition for copper ore in China, with spot treatment and refining charges (TC/RCs) — paid to smelters to process copper concentrate into refined metal — falling sharply this year as a result.

On the trade war, the US duties of 15% on the last tranche of Chinese products left out of tariff barriers ($165 billion of products related to consumer electronics, clothing, sneakers and toys) are not expected to start on December 15, with negotiations continuing so far as to arrive at the signing of the document on the so-called “Phase one”, the first trade agreement between the two superpowers, established in principle at the beginning of October, still waiting to be formalized.

FROM A TECHNICAL POINT

As announced in previous reports, copper was in a triangular accumulation phase ready to restart. In fact, the break up of the first major resistance at $6,000 has confirmed at the moment the goodness of the reaction, with the MACD indicator still in clear positive divergence.
In this context, after a possible settlement phase in the short term, we do not exclude the continuation of the rise with first target estimated at $ 6200 area and then $ 6400.

COPPER 3 MONTH $ WEEKLY

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