By Jim Williams
Trading is in full swing today after Monday's bank holiday in the states and last week's Golden Week holiday in China. Most metal prices are catching up after the holiday break, but copper hasn't missed a beat as the red metal opened this morning at $3.04 a pound.
"The move above $3 is positive," states tED contributor Andrew Hecht of Seeking Alpha. "Base metals are the best performing sector up over 16% for the first nine months of the year. Copper stocks have begun to drop again, slowly.
"I think copper looks strong but the higher it goes the bigger the chances of sharp corrections. Support is from $2.80 to $2.90 per pound, resistance from $3.10-$3.20. The high odds are for a consolidation from $2.90-$3.10 for the rest of 2017," concludes Hecht.
A weaker dollar helped push London copper prices higher in overnight trading as well. The dollar index was down 0.13% to 93.70. Since January, the index has actually dropped from 103.815 to where it sits today – a decline of around 10%, which is positive for the prices of raw materials like copper.
Other Price Factors
If you have been following copper for any length of time, you know what happens in China's economy steers the ship that is copper pricing.
China released its Caixin Composite Output Index yesterday, which covers manufacturing and services companies. The index fell for the third month in a row. This time by a full point, from 52.4 in August to 51.4 in September. This is in addition to China's Caixin General Services Business Activity Index dropping to 50.6 from 52.7 in August, the worst reading since December 2015.
The decline of both of these reports suggests that growth in China, the world's second largest economy, may be slowing. We will have to wait and see what the recent economic data release does to the market.
For more in-depth details on the Caixin reports, click here.
Copper Touches 4-Week High – an article posted on Reuters.com about China's future plans for scrap metal.