As an industrial metal, copper is being bludgeoned by the coronavirus outbreak. The United States Copper Index Fund (NYSEARCA: CPER) and the iPath Series B Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) confirm as much.
Some analysts are growing concerned that global troubles could drag down the industrial metal as well. Along with the trade concerns, copper prices were weakening on softening global economic data. The base metal is a significant component in many industries, including construction, and is widely seen as a barometer for global economic health.
However, some market observers believe the copper crash is nearing its end.
“A study released Friday by commodities analyst Colin Hamilton of investment bank BMO Capital Markets makes the case that faced with an unprecedented demand shock, the mining industry needs to get serious about cutting supply,” reports Frik Els for Mining.com.
Copper Quagmire
With an economic slowdown in China all but inevitable as a direct result of the novel coronavirus outbreak, copper markets and related ETFs could continue to weaken on the diminished industrial demand from the largest consumer in the world.
Fortunately for would-be copper bulls, the red metal could rise over the near-term as producers move to trim output.
“There has been a steady stream of announcements from major copper producers, mostly in South America, outlining production cutbacks and construction delays, over the past week,” according to Mining.com.
However, dueling views of the industrial metal remain in place. Some analysts are growing concerned that global troubles could drag down the industrial metal as well. Along with the trade concerns, copper prices were weakening on softening global economic data. The base metal is a significant component in many industries, including construction, and is widely seen as a barometer for global economic health.
“Whereas the 2015-2016 period where copper was trading below $2.00 a pound ($4,400 a tonne) resulted in a “long duration grind into the cost curve”, today’s environment is more akin to the first quarter of 2009 when prices fell rapidly, but then, as now, China was the first to recover,” Mining.com reports, citing BMO Capital Markets.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
