Barclays Capital As the LME delivered 3,250 tons of copper to the warehouse, copper prices fell below $3,600, while stocks increased in Singapore, Rotterdam and Hull. This backflow of inventory was offset by a partial outflow of inventory, resulting in a net increase in LME inventory of 2,250 tons. At present, LME inventory backflow is a key factor affecting the market and copper prices will immediately respond. Another key factor is the potential negative impact of high energy prices on U.S. economic growth. In fact, copper prices are not far away from historical highs, but investors have refused to increase new long positions. CFTC data shows that there are a large number of non-commercial shorts in the Comex market. This is worth paying attention because the premium is strong. Chinese speculators also hold a large number of short positions in the LME. We believe that the spot premium this year will continue to be strong, so these short positions have the risk of being forced to close out. This will exacerbate price fluctuations and at the same time put upward pressure on prices. In addition, manufacturers expect copper demand to increase in the fourth quarter, as consumers will return to the market after experiencing a long period of inventory release. This is also our basic assumption. Due to the slowdown in economic growth, consumer refusal to purchase copper at such a high price (causing it to release inventory) and some alternative use, the spot premium has weakened (except for the United States). The same is true of China's spot premium. China's rising water imports from Chile have fallen to US$75-80/ton, and in early August it was about US$100/ton. The reason why the premium declines is due to seasonal weakness. It is difficult for manufacturers to pass high prices to consumers and reduce orders. However, after the end of the consumer off-season, we expect that both Chinese and U.S. consumer companies will return to the market because we do not think they were overbought some time ago. The European consumer purchases will be less, because the pressure from inventory reduction is not so obvious. European consumer activity in the copper market will depend on the EUR/USD trend. As long as metal prices fall from highs, consumers in Europe and Japan will use local currencies to strengthen their purchases. Macquarie base metals yesterday's base metals other than tin fell across the board. Copper inventories increased to 6,5150 tons, while copper prices closed 0.8% lower. Three-month aluminum recorded a larger decline. In the late afternoon in London, raw aluminum fell by 1.1% to US$1,876/tonne (85.1 cents/lb). Yesterday announced new orders data for the Eurozone and the United States. European industrial new orders increased by 3.1% QoQ and 4.9% YoY. Durable goods orders in the United States decreased by 4.9% QoQ and 5.0% YoY. The data in the euro area adds to the recently released data. The statistics in the United States fluctuate so much that there is no need to worry too much about weak durable goods order data. Refco Copper: The upside trend is still valid as the uptrend of the support resistance is still in effect, and the bull market cycle has entered the late period. The possibility of a sharp correction in copper prices is increasing and it may even be completely reversed. The market has already consolidated its recent upward trend. If the copper price weakens, it may be supported by the support levels of 3550/55 and 3505/10. Only after the effective support is broken, the price of copper may be under pressure and the axial region 3450/55 may be tested. The resistance is at 3640/45, and the next resistance is at 3665/70; the resistance needs to be broken to extend the uptrend. Trading strategy: Waiting for a new signal before considering re-entering. Aluminium: The increasing downside risk may impact the support of basic technical indicators to continue to deteriorate, and the recent upward trend is part of the consolidation model. There are signs that the short-term uptrend will lose its kinetic energy, and the downward risk of aluminum prices will increase. Aluminum prices may hit support levels 1860/65 and 1835/40. If the latter area is effectively broken, aluminum prices may accelerate down to the 1785/90 area. The rebound may encounter resistance 1920/25 and 1945/50. Trading Strategy: Continue to hold short positions in 1900 and 1920 positions. The stop loss is set above 1950 with targets of 1790 and 1740. Triland Copper: Stocks rose 2250 tons, triggering selling. However, the decline was smaller and the copper price only fell to 3,587; afterwards, it was supported by trade buying and short covering, and the copper price rose back to 3620. The weak durable goods data led to long liquidation, and copper prices retreated in the afternoon. Copper prices hit a low of 3575 and then closed at 3590, a daily drop of 27.5. Viewpoint: The risk of copper prices falling towards 3550 in the short term is increasing. Keep watching. Aluminium: The price of aluminum was suppressed by trade hedging and option hedges and fell below 1895. After establishing a base near 1905, aluminum prices were basically trading in the range during the trading hours. After midday, copper prices retreated, causing aluminum prices to be suppressed by delta hedge selling. When copper prices were under pressure, the aluminum market had a strong trade selling price. Aluminum prices fell to the low of 1887, and they recorded a decrease of 32 US dollars at the close. Point of view: There may be a rebound after the fall, but it is expected that the aluminum price will test the 30-day MA (the MA is located at 1872). Man Financial In the summer of the northern hemisphere, affected by this, the market was boring on Tuesday. The opening on Wednesday was also quite calm, after which copper stocks rose slightly, triggering a small amount of selling, which in turn affected the aluminum market. The existing home sales data released on Tuesday was 7.16 million sets, slightly lower than the expected 7.25 million sets. Copper Support Position: $3500 Resistance Level: 3,670 USD Copper price is reported at 3,600 USD/ton, down by 18 USD/ton. Affected by the increase in inventories, copper prices recorded a low of $3,587. Short-term support at 3600 was hit, and intraday copper prices have broken this support. Aluminum support: USD 1880 Resistance: USD 1940 Aluminum price was USD 1914/ton, a decrease of USD 6/ton. The aluminum price trend was again led by copper prices. Reuters LME: LME copper contracted slightly on the London Metal Exchange (LME) on Wednesday. The three-month copper contract closed lower on Wednesday and was pressured by traders, but the trade was relatively sluggish. Three-month copper closed at $3,590 per ton, and late Tuesday, the composite transaction closed at 3,618. The market is expected to trade in a range for the next few trading days. Investors’ concerns about copper inventories will restrain the market from continuing its recent gains. A trader said: Most of the trading time in the day was quiet, showing a range trend. Inventories are increasing, but the reverse spread is still higher than $200, so the market will continue to consolidate unless there are major events. The spot/three-month copper inverse spread is about $215, compared with less than $200 last week; LME copper stocks have more than doubled to 6,5,150 tons in weeks. Adams of Basemetals.com stated in his daily report that there is room for a surge in premium because supply and demand conditions are still very balanced. Speculators are very bullish. If the market conditions are reversed, this will make the market vulnerable, but the fund's interest in commodities is also increasing. Although these funds continue to increase their positions and bet on copper prices may rise further, we are concerned about how these funds will respond if prices fall. Three-month aluminum fell by 23 U.S. dollars to 1,888 U.S. dollars; the three-month nickel rose by 25 U.S. dollars to 14,875 U.S. dollars, and other basic metal prices remained unchanged.
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