Copper topped the ranks at the end of last year and moved north to the middle of February without breaking any serious resistance peaking at $2.8230. Then the price drifted lower, closer to the area of the December 2016 low at $2.4480 as projected in my previous update. Copper has now bounced higher and I would like to share with you some new data, which could change my outlook for the metal.
I would like to start from Chinese data as they are the top importer of the metal in the world. China’s copper import dropped almost 20% in 1Q of 2017 according to the Chinese customs statistics and this is not supporting the pricing information. Below are two charts to show you more headwinds from China.
Chart 1. Copper Vs Chinese GDP Growth Rate (Quarterly)
The Chinese economy (left scale, blue) advanced only 1.3 percent in the 1Q of 2017, following a 1.7 percent growth in the previous three months and missing market estimates of a 1.6 percent growth. It has been the weakest expansion since the 1st quarter of 2016. GDP Growth Rate in China averaged 1.84 percent from 2010 until 2017. [Read more...]