Copper has bounced small today after a -8% pullback in last three days largely due to China credit fears and the impact this will have on inventory used as collateral for loans. The other side of this story is that copper supply dynamics are also getting worse. Copper production in the 4Q was +12% y/y and there is fear this could go higher.
Copper Chart Suffers on Both Supply and Demand Factors
The chart on copper has more or less held 315 – 320 over the last year. China is 40% of the worlds copper demand. Be cautious about selling into this pressure however as the only difference we see in copper fundametnals now than where they were last week before the selloff is that export data from China last Friday night was terribly weak. China will release Retail Sales, FDI, FAI, and Industrial Production numbers tomorrow night. Industrial production figures have been pretty resilient and we could see a bounce in Dr Copper if China can hold serve tomorrow night.