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Copper prices are on a downtrend after reports showed worsening manufacturing growth in the US and China.

Chinese factory activity expanded in July at the slowest pace in 17 months, with the official purchasing managers’ index (PMI) falling to 50.4 from 50.9 in June, remaining above the 50-point level that separates growth from contraction.

China’s imports of raw copper also trended downwards after recovering sharply from the coronavirus pandemic amid stimulus spending in the middle of last year.

Imports reached a high of 762,211 tonnes in July 2020, and have been declining ever since, registering a year-on-year contraction (since June 2020) of 34.74%.

On the technical front, copper prices may head towards the first natural support in the 9350 $/ton – 9300 $/ton area (bullish trend from the March 2020 lows). The month of August is usually characterized by low trading volumes due to summer closures. This scenario could keep prices weak until at least the middle of the month.
In fact, even on a seasonal basis (over the last 30-15-10-5 years) copper prices in August show an initial phase of weakness in the first two weeks before developing a subsequent recovery.

Keep an eye on the movement of copper prices in the coming days to get first indications of directionality.

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