Outlook on Copper by Mr Abhishek Bansal, Abans Group
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Below is Outlook on Copper by Mr Abhishek Bansal, Founder Chairman, Abans Group.
Copper down as Covid-19 delta variant Spread Casts Doubt on Growth Prospects-
The Covid-19 delta variant threatened to derail China's and the world's economic recovery.The virus outbreak in China is spreading, and virus mutations are raising concerns about how to manage the pandemic. Copper prices on the LME are now trading at 9437, down from a recent high of 9921.25 on July 27th.
The industrial metal has been unable to find a new direction due to mixed economic data in the United States. On the plus side, the US July ISM services index increased by 4.0 points to a new high of 64.1 (data from 1997), beating expectations of 60.5. The ADP employment report for July in the United States, on the other hand, was weaker than expected, coming in at +690,000, the smallest gain in 5 months.
Copper prices, on the other hand, have been unable to find support from China's July PMI data. Caixin Media Co. and researcher Markit reported that the Caixin China purchasing managers index fell to 50.3 in July from 51.3 in June. The reading in July was the lowest in 16 months, but it remained above the 50-point threshold that separates expansion from contraction. However, PMI's services exceeded expectations. The Caixin/Markit services Purchasing Managers' Index (PMI) increased to 54.9 in July, the highest level since May and up from 50.3 in June.
On the Comex, Copper open interest was 209200 contracts on August 4th, down 1069 contracts in the previous five trading days, while on the LME, open interest was 176992 contracts on August 4th, up 2160 contracts in the previous five trading sessions. Coper open interest on the SHFE as of the 5th of August 2021 is now at 294225 contracts, down 18809 contracts in the last five trading sessions.
As of the 4th of August, Comex copper inventory stood at 41446.6 metric tonnes, up 225.90 from the previous five trading days. As of the 5th of August, the LME's copper inventory stood at 236100 mt, up 925 mt from the previous five trading sessions. Copper inventory at SHFE is now at 44766 mt, down 3324 mt in the last five trading sessions as of August 5th.
Copper prices are likely to trade lower as long as they remain below the key resistance level of the 50-day EMA at $9537, while immediate support can be found around $9243.
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