Industrial metals, such as copper, have made for predictable investment victims to the coronavirus outbreak and exchange traded products, including the United States Copper Index Fund (NYSEARCA: CPER) and the iPath Series B Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC), reflect 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.
In today’s coronavirus-dominated environment, bearish views on an asset like copper are understandable, if not expected, but some of the clouds hanging over Dr. Copper may be clearing.
“In a new report, Fitch analysts are revising up their 2020 copper price forecast to $5,900/tonne from $5,700/tonne as they now expect increased stimulus from the Chinese government to lift prices higher over the back half of the year,” reports Mining.com. “The research firm expects copper sentiment to remain subdued in the short term, thus weighing on prices, as investors react to the latest Covid-19.”
Copper Concerns
Chilean Mining Minister Baldo Prokurica believes ebbing of trade tensions between the U.S. and China will lift copper prices. A skeptical view of those comments is that Chile is the world’s largest producer of the red metal and China is the biggest copper buyer, meaning it behooves Prokurica to be a copper bull.
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.
“As trade tensions between the US and China eased following the signed phase one trade deal in January and major markets’ manufacturing expanded according to January PMI data, copper prices enjoyed relief from 2019 woes and traded above $6,300/tonne,” according to Mining.com. “However, the positive sentiment was short-lived as the spread of the Covid-19 epidemic in China led to the lockdown of multiple cities, congested supply chains and shutdown of factories that use primary copper metal.”
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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.
