Copper Fundamental Analysis – week of September 5, 2016

Copper remains weak at 2.078 and is a sell moving into the middle of September with a lot depending on Chinese data this week and the strength of the US Dollar. While other metals have shone in 2016, copper has struggled to gain traction, and last week erased its gains for the year. Demand in China, the world’s biggest user, is slowing just as Goldman Sachs Group Inc. predicts a “supply storm” will hit the market and drag prices even lower.

Stockpiles of the metal are growing, further pointing to a demand slowdown. Inventories monitored by the London Metal Exchange have jumped to a 10-month high. Supplies are likely moving out of China and into warehouses tracked by the London Metal Exchange, Commerzbank AG said in a report Aug. 24. The hoard underscores why money managers are betting on more price declines.

There are already signs of China’s wavering demand. The country’s imports of refined copper shrank in July to the smallest in 17 months, while exports jumped fivefold from a year earlier, customs data show. Metal was probably leaving the country at a similar pace this month, evidenced by the gain in LME inventories, Commerzbank said.

while consumption is slowing in China, there are pockets of optimism elsewhere. In the United States, the No. 2 copper user, the two leading presidential candidates pledged to step up spending on infrastructure if elected. In Japan, Prime Minister Shinzo Abe’s government will spend ¥6.2-trillion on infrastructure.

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This Week’s Economic Events That You Should Be Monitoring:

 Government Bond Auctions

Date Time       Country           Auction

Sep 06 11:00 Austria Holds bond auction

Sep 06 11:30 UK 1.5% 2026 Gilt

Sep 06 11:30 Germany Holds I/L bond auction

Sep 07 10:30 Denmark Holds bond auction

Sep 07 11:03 Sweden Holds bond auction

Sep 07 11:30 Germany Eur 5bn 0% Aug 2026 Bund

Sep 08 11:00 Ireland Holds bond auction

Sep 08 17:20 Italy Announces details of bond auction