Base Metals

What You Need to Know About the Price of Copper Mar 2016

Base Metals

Copper prices were up 0.14 percent on Thursday to $2.21 per pound. Overall, the price of copper today is 4.63 percent higher than it was at the start of the year, but a recent dip has some analysts concerned that prices could fall further in the near term.

Copper prices were up 0.14 percent on Thursday to $2.21 per pound. Overall, the price of copper today is 4.63 percent higher than it was at the start of the year, but a recent dip has some analysts concerned that prices could fall further in the near term.
Earlier this week, Bloomberg quoted a report from Barclays (LSE:BARC) analyst Kevin Norrish which warned that advances for the price of copper today – and for other commodities – may not be truly grounded in stronger fundamentals.


“Investors have been attracted to commodities as one of the best performing assets so far in 2016,” the report stated. “However, in the absence of any concerted fundamental improvements, those returns are unlikely to be repeated in the second quarter, making commodities vulnerable to a wave of investor liquidation.”
Certainly, that falls in line with what other firms are saying. In a March 29 report, Commerzbank stated that “[t]he recovery movement enjoyed by copper appears to have faltered once and for all,” noting that copper prices had fallen below their 200-day moving average, a technically important level. The copper price today has lost 3.92 percent since March 21.
At the same time, net long Comex copper positions fell for the second week in a row as of March 22, indicating that money managers have withdrawn support for the red metal.
Meanwhile, Reuters reported that LME copper prices fell to a four-week low on Thursday. Prices for LME copper fell as low as $4.829.5 per tonne on the back of concerns over China’s economy. The country is set to release its latest purchasing managers index data on Friday, and economists are expecting manufacturing activity to have shrunk in March.

Still, there are some points that could be positive for the price of copper today as well. Economists polled by Reuters noted that while China’s housing market has seen some renewed optimism, a factor that’s supportive for demand for copper and other construction materials.
And while Commerzbank noted that net long Comex copper positions had fallen, the firm also pointed out that positions were ” still at the relatively high level of 23,000 contracts,” suggesting “further potential for correction.” By March 28, net long positions had climbed to 27,862. That’s the highest number since May, according to Bloomberg.
For his part, technical analyst Daryl Guppy sees copper slowly recovering. Writing for CNBC, he notes that, while there are still a few obstacles ahead for the red metal, the downward pressure on the price of copper today could be easing.
“Investors should watch for the future development of long-term consolidation chart patterns to develop,” he stated. “These may include a rally to near the 250 cents level followed by a retreat and then another rally that retests the resistance level.”
Company news
This week, Copper Fox Metals (TSXV:CUU) announced an outline for its 2016 program at its Schaft Creek project in British Columbia. The program, which has an estimated cost of roughly $0.7 million, will include resource modelling of the Schaft Creek deposit, environmental monitoring of the project and an application for a Multi-Year Area Based Permit.
Meanwhile, Kombat Copper (TSXV:KBT) continues to make progress towards recommencing mining at the Kombat mine in Namibia. The company reported that plant clean-up has been progression will, with the comissioning date of the plant expected to be in the third quarter of 2016.

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. 
Editorial Disclosure: Copper Fox Metals is a client of the Investing News Network. This article is not paid for content.

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