Trade wars pushed the copper price down
For the copper market is not the best of times, and while the world is watching trade wars between the US and China, metal prices are falling. This week it became known that Washington is seriously considering the introduction of new, higher duties on Chinese goods. The rates may increase to 25% from 10% offered before. It seems that the amount of the fee as the time of its introduction is a matter of a few weeks.
The total “weight” of duties may be in the range of $200 billion. This means that China will be more and more difficult to break into the American market. Are already duties on Chinese products, which are estimated at $50 billion, and the market is nervous.
China consumes about half of all offered on the copper market, so any news regarding the deterioration of its position in the global commodity chain, is negative for metal prices.
If the States remain as aggressive in terms of trade with China, the economy of China will begin to lose growth. The signals from the macroeconomic statistics, are not encouraging as of now the PMI in China for July fell to 51.2 points from 51.5 points in June. The indicator reflects business sentiment of purchasing managers in the manufacturing sector, and its fall to five-month lows perfectly illustrates how sensitive the economy and its industry to the worsening of the external component. Shopping fight can cost a lot of money to both parties, because it is still unknown how and when Beijing will respond to these attacks.
The descending trading channel in the copper formed on June 10, during this time, the metal has lost in value for 20% and trading in early August at $6052 per ton. The technical picture paints a likely consolidation in the range of $5895-6315 per ton, if the history of trade wars will temporarily lose sharpness. If the United States will take a new toll, and China will finally meet on the aggression, the copper will easily fall back to $5500.