Copper Fundamental Forecast – September 14, 2016

Copper gained 14 points to trade at 2.114 bouncing off of recent lows. Overall better sentiment from China and better than expected Japanese manufacturing production helped support metals today. Copper edged up on Tuesday and away from a 12-week low after comments by a Federal Reserve official assuaged concerns that the U.S. central bank could hike rates as soon as next week, weighing on the dollar.

Three-month copper on the London Metal Exchange edged up 0.3 percent to $4,660.50 a tonne by 0120 GMT, following a small gain in the previous session when prices plumbed $4,582 a tonne, the weakest since June 20. Copper inventories in warehouses approved by the London Metal Exchange are rising fast as the metal flows out of China, where demand remains soft.

Stockpiles in LME warehouses edged up 3% to 350,600 tons on Friday, the highest total in a year. Inventories started climbing Aug. 22, soaring 66% since then. The increase has been bad news for prices, with three-month copper futures on the LME slipping 7% from a high in late July, to trade around $4,630 a ton.

The Federal Reserve should avoid removing support for the U.S. economy too quickly, Fed Governor Lael Brainard said on Monday in comments that solidified the view the central bank would leave interest rates unchanged next week.

Big Japanese manufacturers turned optimistic about business conditions in the third quarter and companies revised up their capital expenditure plans, a government survey showed on Tuesday, in a sign the economy is gaining momentum.

Strong comments from China’s top state planner that the economy needed more support was most likely aimed at persuading the central bank to take bolder policy action.

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 September 14, 2016

Government Bond Auctions

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