Reasons for upcoming coming Copper demand
Via Bloomberg
With the concern over global growth , no US-China trade deal finalised yet, Brexit concerns slowing UK business investment, German PMI manufacturing data slumping and the Fed in 'wait and see' mode, copper prices have been treading water over the last month. However, I came across this Bloomberg article suggesting that Copper may soon get a boost from Chinese demand.
Chinese imports of copper scrap have hit record low levels recently as the Government has reduced shipments of lower-grade metal waste to reduce environmental pollution. See chart below:
This trend is seen as set to continue, with the effect that refined copper should experience higher demand. On top of this government policy induced demand, copper prices tend to pick up after the Lunar New Year and consumption is also expected to benefit from a VAT cut for Chinese manufacturers due to come into play April 1.
Technically there has been a golden cross earlier this month, where the 50 MA tops the 200MA. See chart below. Supply disruptions in Chile and Peru add to potential demand and Bloomber noted a $6.5 million spread trade on Comex earlier on in the month looking for higher prices to come. See chart below.
Copper is a buy on the dips.
