Weekly copper market review 11/02/2020.Support us by consulting our free daily magazines with color stock charts and weather maps on our commodity-market-review.com website.
TECHNICAL ANALYSIS OF COPPER
Last week, COMEX copper futures closed lower at $3.0470 per pound. The worsening health situation with a sharp increase in covid-19 cases in the US and Europe has strongly impacted the markets last week. With the magnitude of the second wave, Europe is reconfirming itself, as is the case in Ireland, Czech Republic, France, Germany, England, Portugal, Austria, and countries such as Spain and Italy, and others are taking increasingly drastic measures, such as curfews, closing bars and restaurants, or limiting people in meetings. The United States is seeing a record number of covid cases in the run-up to the election.
The rise of the dollar also weighs on the price of copper. It can be explained by the safe haven status of the greenback, and by the postponement of the American support plan.
Chilean copper production amounted to 484K tons for September, a decrease of 0.8% compared to 2019. Accumulated production in September amounted to 3,302 thousand tons, an increase of 0.5%. Chile is the world's largest copper producer.
Total copper stocks are down to 383314 MT, losing 23415 tons in one week.
In the United States, the American election is scheduled for tomorrow, November 3, and tensions in the market cannot be excluded. Investors fear the possibility that Donald Trump will be declared a narrow loser and do not want to recognize the results, making the transition more complicated and delaying the vote on the long-awaited plan to support the US economy.
ECONOMIC RESULTS
- Last week, as a pleasant surprise, US GDP rose by +33.1% in Q3 for an expected 31%, and in the Euro zone, GDP was +12.7% in Q3 for only +9.4% expected.
- On Saturday, China's manufacturing PMI rose to 51.4 for an expected 51.3.
- On Monday, the Caixin manufacturing PMI representing small and medium enterprises in China comes out at 53.6 for 53 expected. The Euro zone manufacturing PMI is at 54.8 for 54.4 expected, and the U.S. manufacturing PMI is at 53.4.
- Tuesday, the U.S. presidential election and industrial orders.
- Thursday, Euro-zone retail sales.
- Friday, the U.S. employment report.
CERTIFIED COPPER STOCKS
- Copper stocks on the London Stock Exchange are down to 171300 MT from 180300 MT last week.
- Copper stocks on the Shanghai Stock Exchange were down to 139657 for 155506 MT the previous week.
- Copper stocks on the New York Stock Exchange are up to 72357 MT from 70923 previously.
- Total copper stocks are down to 383314 MT compared to 406729 MT last week. Total copper stocks are below the five-year average.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week up to 93.882. The 2nd epidemic wave is scaring the market and the Dollar seems to be playing its role as a safe-haven currency. The chances of a quick agreement on a plan to support the U.S. economy are now nil. We will have to wait now for the election result, and this is beneficial to the Dollar in the short term.
On the FED side, things will certainly remain frozen until the outcome of the American election. The FED has insisted on the need for a quick vote of a support plan, and assures that the key rates will remain permanently low.
A low dollar is generally favorable for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The net speculative position on the copper futures markets is down this week to 66.916 K instead of 67.265 K.
