Industrial and Base Metals Fundamental Analysis – November 20, 2015 – Forecast – Copper & Palladium

Analysis and Recommendations:

Copper recovered as the greenback eased and traders bought up the cheap commodity which is now trading at 2.085 while Palladium gained $7 ½ to reach to reach 539.53 as the dollar fell. Prices of base metals declined by more than 5% on average in the last two weeks. While the price of aluminium went down only slightly, that of copper dropped by 8.6%, hitting new six-year lows. Although the latest monthly data on Chinese imports do not signal any significant deterioration of demand for copper, we believe that concerns about the improvement of Chinese demand continue to be the main reason for the dramatic fall in the prices of copper and base metals in general. Therefore, the data on the business mood in China in particular will be of interest in the next two weeks – not only in terms of base metals.

Commodities have sunk to the lowest level in 16 years as investors grapple with the prospects for the first increase in U.S. borrowing costs since 2006, a slowing Chinese economy and surpluses of everything from oil and iron ore to aluminum. Minutes of Federal Reserve meeting in October, released on Wednesday, showed that policy makers’ inserted language to stress a move in December may happen.

Copper futures continue to struggle significantly, and are currently just above their worst point in more than five years, which says a lot about the state of the global economy and, more notably, the Chinese economy.

The summer of 2009 was the last time copper was this low. The base metal has dropped by about 22% this year, alone, so, naturally, we should take a step back and analyze the potential factors leading to this sharp decline.

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Friday, November 20, 2015

Government Bond Auctions

Date Time Country

Nov 19 10:30 Spain 0.25% Apr 2018 Bono, 1.15% Jul 2020 Bono, 5.4% Jan 2023

Nov 19 10:50 France Eur 7-8bn; 4.25% Oct 2018 OAT, 0.25% Nov 2020 OAT, 2.25%

Nov 19 11:50 France Eur 1-1.5bn; 0.25% Jul 2024, 1.85% Jul 2027, 3.15% Jul 2032

Nov 19 N/A US Holds 10-year TIPS auction

Nov 20 16:30 Italy Announces details of CTZ/BTPei on 25 Nov

Nov 23 12:00 Belgium Auctions OLOs

Nov 23 N/A US Holds 2-year note auction

Nov 24 17:30 Italy Announces details of BTPs/CCTeu on 27 Nov

Nov 24 N/A Holland Eur 1.0-2.0bn 0.25% Jul 2025 DSL

Nov 24 N/A US Holds 5-year note auction

Nov 25 11:03 Sweden Holds bond auction

Nov 25 11:10 Italy Auctions CTZ/BTPei

Nov 25 11:30 Germany Eur 3bn 1.0% Aug 2025 Bund

Nov 25 N/A US Holds 2-year FRN auction

Nov 25 N/A US Holds 7-year note auction

Nov 26 11:03 Sweden Holds bond auction

Nov 27 11:03 Sweden Holds bond auction

Nov 27 11:10 Italy Auctions BTPs/CCTeus