Copper Rally Fades
Copper prices have come under pressure following Trump’s return to office yesterday. The threat of incoming tariffs, particularly on China, has raised concerns over the demand outlook for the metal. Copper prices had been enjoying a strong start to the year prior to the Trump-drive sell-off.
China Recovery Under Threat
Signs of a burgeoning economic rebound in China saw the futures market making solid gains through the first half of January, despite an uptick in the US Dollar. Recent stimulus measures in China, as well as the prospect of further action, have helped underpin sentiment. Additionally, better import/export data in recent weeks has amplified bullish sentiment, suggesting that activity in China is at last picking up again.
Trade Tariffs Impact
However, with the copper market now facing the prospect of fresh US trade tariffs on China, this bullish sentiment is being diluted. The big question for traders now is when such tariffs are likely to be applied? Trump had previously threatened trade tariffs on day 1. However, so far, no trade actions have been taken though Trump has said he wants to apply 25% levies against Canadian and Mexican goods by Feb 1st. For now, no news on China.
China Uncertainty
If traders get the sense that negotiations are taking place to avoid or reduce the tariffs, this could lead to a fresh rally in copper prices. Indeed, the delay in Chinese tariffs looks linked to Trump’s attempts to secure US ownership of at least 50% of TikTok with Trump threatening severe tariffs (of up to 100%) on Chinese goods if a deal isn’t done.
Technical Views
Copper
The rally in copper has stalled for now into a test of the triangle highs, with price since reversing back under the 4.30 level. While below here, and with momentum studies falling sharply, focus is on a test of the triangle lows next. If broken, a return to YTD support and the 3.9350 level below looks likely.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.