Copper Soars As China Demand Jumps
AI Stock Support
Copper prices are soaring higher today with the futures market up 2.8%, now up almost 5% on the week. There are a few factors combining to help support copper prices here. Firstly, the rally comes amidst a broad improvement in risk sentiment today linked to the rally we’re seeing in Asian semiconductor stocks and AI stocks in general. Given copper’s use in chip building, the rally in AI stocks has big bullish implications for the copper demand outlook and given the supply issues currently dogging the metal, this lift in demand expectations is creating explosive price action.
Better China Demand
We’re also seeing better demand signals out of China this week with the latest data reporting a jump in import premiums for copper. Copper premiums there have surged to their highest level in over a year, reflecting a surge in demand. Additionally, site outages at several Chinese smelters have dented domestic production, driving up the demand for imports at a time when output in Chile, the largest global producer of copper, has fallen to record lows.
Weaker USD
Finally, the recent shift lower in Fed tightening expectations is also helping boost copper demand here. USD has remained muted recently following the sharp drop in June inflation reported last week. With traders now mulling the prospect of a lower inflationary path in coming months, commodities have risen and look set to rise further if this narrative gains greater traction.
Technical Views
Copper
The market is now soaring higher again and fast approaching a test of the 6.5830 level. With momentum studies bullish, focus is on a continuation of the bull channel with the record highs around 6.7190 the big challenge for bulls. Near-term, the bullish outlook remains while price holds above 6.2845.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.