MW: Copper prices may have further to fall as Chinese demand eases
Copper prices could have further to fall after dropping close to their lowest level for two weeks in London on Wednesday on persistent concerns about weakening demand from China, where economic growth has slowed and demand for metals is therefore easing.
From a technical perspective, the copper price chart now shows a “minor double top”, writes Axel Rudolph, a senior technical analyst at Commerzbank. “Because of this chart formation we decided to neutralise our short-term outlook and allow for a slip back towards the $5,103.00 October 8 low to be seen,” he adds.
The benchmark copper contract on the London Metal Exchange was down 0.3% at $5,188 per tonne mid-morning, after dipping to its lowest level since that key October 8 date earlier.
“Should this level be slipped through, the current October low, two-month support line and late September low at $5,010.00/$4,915.50 may also be revisited. We do not expect the next lower August low at $4,855.00 to be retested, though,” Rudolph writes.
Copper, aluminium, nickel and zinc prices have all come nder selling pressure on concerns about demand from China as industrial production there slows, and on worries about global growth more generally, as the following chart shows.
This has also put mining stocks under the spotlight. “Given the very tight revenue margins in the mining industry, cheaper copper could trigger a fresh wave of panic among investors and be another hit on UK miners’ stock prices,” writes Ipek Ozkardeskaya, market analyst at London Capital Group.
“Unfortunately, slower than 7% growth in China is not hinting at any sustainable recovery yet,” she adds.
