The recent rising copper price had much less to do with the prospects for Donald Trump’s election and much more to do with perceived demand in China. Price rises have unquestionably been speculatively fueled. Turnover on the LME has been at record levels recently, a development mimicked by the Shanghai Futures Exchange. Ironically, although PMI figures in China remain robust, refined copper imports have been falling although concentrate import volumes have held up well.Production: Codelco, the world’s largest copper miner, has just confirmed the lowest delivery premiums to the Chinese market on recent record, supporting comments made by Chilean miners that concentrate supply remains plentiful and will continue to outstrip demand next year. Speculators, however, were having none of that, possibly supported by algorithm trading and abetted by short sellers scrambling to cover positions, the copper price has powered upward making gains of some 20% this month.
China Stimulus: This year’s stimulus measures in China are expected to wane by Q2 of 2017. Additional announced spending on construction and infrastructure in China, if supported by continued robust factory output, may limit the downside and encourage a period of consolidation between $5,000 and $5,400 per mt before a new trend emerges but when that will be, or what the direction, is too early to call.
Trump Infrastructure plans: As for the new president’s infrastructure plans, he still has to get those past Congress and the Senate, who, although Republican, may not be universally supportive of the new leader. It’s unlikely any meaningful stimulus resulting from infrastructure investment will impact demand much before 2018.
- Nigerian oil output to slump further as Forcados gets shut-in-
- Nigeria’s hopes of ramping up its oil output this year have been diminished.
- Obama’s Offshore Oil Plan Forces Drillers to Focus on Gulf
- The Obama administration’s decision to forgo auctions of new oil and gas drilling rights in US Arctic waters deals a blow to energy companies seeking to lock up new territory beyond the long explored Gulf of Mexico.
- Goldman Says Scope for OPEC Deal Makes Oil Short-Term Buy Goldman is now tactically bullish on the likelihood of an OPEC agreement and expects oil prices in New York to average USD 55/bbl.
- Prices in New York rose as much as 3.1% to USD 47.11.
- Global benchmark Brent rose as high as USD 48.40/bbl, up 3.3%.
- The market is actually recovering from early session weakness as bearish traders cut losses after Iraq said it was willing to “shoulder responsibility” for some of OPEC’s planned production cuts and as U.S. government data showed crude inventories fell last week.
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