Copper: Industry Executives Expecting Higher Prices

Copper prices rose this week despite boosted by weakness in the US Dollar in response to a weaker-than-expected ISM non-manufacturing print. In a note released this week, BMI Research suggested that the recent 43-day strike at the Escondida mine had less of an effect on the nation’s copper output than originally thought, forecasting the Chilean copper sector to return to growth by 2018.

Copper industry executives met in Chile this week for a review of the copper market. The headlines of the meeting are that executives feel the decline in copper prices is over and the copper business is now recovering from crisis mode.

However, Chilean mining minister Aurora Williams warned that “it’s very premature to anticipate a new cycle of high prices”. Chairman of Codelco, the world’s second-largest copper producer, said that most in the market expected copper prices to converge around $3 per pound over the next two to three years.

Arnaud Soirat of Rio Tinto commented that “Copper’s long-term fundamentals are quite positive” noting that he expects to see further demand growth from emerging markets. There are further demand expectations linked to Trump’s proposed infrastructure expenditure however many also fear that Trump’s protectionist stance could hurt global trade.

The rebound in copper prices this week has taken price back up to test the key resistance level formed at the 2016 highs. Despite an initial break of the level at the start of the year copper has since failed to get back above this key pivot. A further break of this level should pave the way for a run up to test the next key resistance at the bearish trend line from 2011 highs and the 2015 swing high.

Aluminium: Longs At Fresh Record Highs

Aluminium prices continued higher this week. The latest positioning data shows that money managers increased their bullish exposure to fresh 2017 highs. With price continuing higher, trend following managers are likely to increase their exposure.