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Base metals and copper hit by weak Chinese data

Friday, October 14, 2016 2:26
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(Before It's News)

copper daily chartThe rally for copper finally came to an abrupt halt yesterday as weak economic trade data news from China dealt the base metal a mortal blow, sending it plunging lower and closing the session with the wide spread down candle on very high volume, and signalling the end to the rally of September. The red metal was also doubly hit as China’s copper imports fell to their lowest level since 2015, with both zinc and lead falling sharply in tandem. It is against this backdrop that Chile’s regulators are currently preparing to bring charges against one of the largest copper mines in the country for the alleged mismanagement of water resources, and if duly proved could result in the possible closure and consequent impact on supply. Ironically for China, the PPI data revealed a pick up in prices, driven largely by increasing commodity prices with a consequent tick up in inflation data coupled with consumer prices, so some slightly more encouraging news for the word’s second largest economy.

From a technical perspective the rally for copper failed to find any meaningful traction through the $2.22 lbs area, running into stiff price congestion above, and oscillation around the volume point of control in the $2.18 lbs area, with resistance in the $2.200 lbs adding further downwards pressure. Yesterday’s price action also breached potential support in the $2.14 lbs area and with a low volume node below, we could see further downside pressure with a move back to test the lows of September in the $2.080lbs area in due course.

By Anna Coulling

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