Industrial and Base Metals Monthly Fundamental Forecast August 2015 – Copper

Outlook and Recommendation

Copper took a big tumbled at the end of the month to close at 2.352 while Palladium died to trade at 610.40. Problems stemming from China continued to weigh on metal demands. Ongoing stock market volatility has led to a minimization of USDCNY volatility by the authorities, leaving the pair trading in the most sustained, narrow range since 2010. A high-level government statement that the renminbi trading band will be widened (without timeline), has been accompanied by PBoC comments that it will keep the currency ‘stable’. This implies little risk of significant depreciation against the USD from a policy point of view. The trade surplus continues to widen providing support for CNY across the external accounts, partially offsetting short term outflow pressure.

Commodity prices are also under pressure as supply of many raw materials runs ahead of global demand. Companies that grow soybeans or mine for coal outside the U.S. are opting to keep up production because weaker domestic currencies keep their costs low, while a stronger dollar means they bring home larger profits despite falling prices.

Copper ticked lower on Friday and was facing its biggest monthly loss since January amid sputtering Chinese demand and a stronger dollar, with traders squaring books ahead of the month-end and Chinese factory data over the weekend.

Copper prices are staring down the barrel of a nearly nine percent monthly loss, amid seasonally soft summer demand from end users in China and ample refined supply. A stronger dollar has also cast headwinds across commodities more generally.

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 and we provide daily updates and outlooks.

Major Economic Events In August That You Should Be Monitoring: