Copper Falling on Trade War Risks & China Demand Concerns
Trade War Risks
Copper prices are on watch today as the red metal extends losses through early European trading on Tuesday. The futures market is now down more than 5% from last week’s highs as global risk aversion and fresh demand concerns weigh on sentiment. Fresh trade war prospects amidst an uptick in Trump’s campaign to secure Greenland have rocked risk assets this week with copper no exception. Trump announced a wave of tariffs to hit the EU if it doesn’t co-operate with his agenda and the EU has signalled a readiness to respond with its won tariffs. As such, the risk of a fresh trade war is at a very high levels and commodities are suffering a dimer view from investors. Traders will now be watching Trump’s speech in Davos tomorrow, with risks of further downside in copper on any hostile remarks.
China Demand Concerns
Alongside fresh trade war risks, copper prices are also falling on demand concerns in China. This comes as the Yangshan import premium (used as a key gauge for Chinese copper consumption) hit its lowest level since early 2024 last month. The decline has been linked to the recent rally in copper which saw futures prices hitting fresh record highs. As such, some furtehr correction is likely before price finds an equilibrium again. Alongside this, a crackdown by China last week on HFT has also been linked to the sell off with many suggesting that speculative buyers were partly responsible for driving price up to record highs.
Technical Views
Copper
The rally in copper has stalled for now into a retest of the 6.1090 level. Price has since turned lower and is now testing support at the 5.8550 level where we also have the bull channel lows. If this area breaks, focus turns towards a test of deeper support at the 5.4415 level, in line with falling momentum studies readings.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.