Copper Fundamental Analysis – December 17, 2015 -Forecast

Analysis and Recommendations:

Copper is flat at 2.057 after tumbling this week. Copper had regained some momentum but lost it Tuesday evening. After keeping the Federal Fund rate at a record low of 0.25 percent for almost a decade, the US Federal Open Market Committee (FOMC) is expected to announce a rate increase when its two-day meeting concludes later today.

“We would expect volatile trading after the FOMC announcement as metals react to how other markets are reacting but we feel it may turn out to be mildly bullish as it points to a more normal market set-up for the US,” Fast Markets’ William Adams said.

Market participants currently see an 81-percent chance of a lift-off, according to the CME Group FedWatch. Investors will scrutinize the Fed’s language for clues on the pace of future interest rate increases.

In today’s data, flash manufacturing and services PMIs out of the Eurozone were mixed. Still to come are the final Eurozone CPI, the final core CPI and the trade balance. Data due later from the US includes building permits, housing starts, capacity utilization rate, industrial production, flash manufacturing PMI and crude oil inventories.

Turnover has been slow, with around 4,000 lots changing hands on Select so far. In the spreads, cash/threes remains in contango – it was last at $12.50.

Rio Tinto and its partners said they have secured $4.4 billion from 20 lenders to expand its copper mine in Mongolia. When fully operational, the mine is expected to produce an average of 430,000 metric tons of copper, or roughly 2% of global supply. The company’s board still needs to approve the project, with a final decision expected in the first half of 2016.

“It’s quite a shock to the system for investors and traders who feel that prices at these levels should be deterring investment in new production,” said the president of OptionSellers.com in Tampa, Florida. “We’re supposed to be curtailing production…that was very disappointing,” he added.

Investors have been selling copper in recent months, with prices hitting a six-year low of $2.0215 a pound on Nov. 23, on fears that supply from the world’s mines continues to grow even as demand is weakening. Copper purchases from China, the world’s top copper consumer, have been growing at a slower pace this year as the country’s manufacturing and construction activity slowed. Meanwhile, analysts predict that global mine production will hit a record in 2015 and set fresh records in years to come.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, December 17, 2015

Government Bond Auctions

Date Time Country

Dec 15 11:15 Austria Holds RAGB bond sale

Dec 17 10:30 Spain Auctions Bonos/Obligaciones

Dec 17 11:30 UK GBP 0.7bn 1.25% Nov 2032 I/L Gilt

Dec 17 19:00 US USD 16bn 5-year TIPS auction

Dec 23 17:30 Italy Announces details of CTZ on 29 Dec, plus BTP/CCTeus on 30 Dec

Dec 23 US Holds 2-year FRN auction