Despite rebounding from last Friday from a fresh 11-month low, some analysts still kept bearish sentiments on copper, citing the recent sharp losses and believe the metal has hit bottom.
Copper, widely viewed as a bellwether for the global economy, has been battered amid escalating trade ten- sions that resulted in the United States imposing tariffs on $34 billion of Chinese imports and Beijing quickly retaliating.
The recent downtrend, which has seen copper shed 14 percent since touching a year peak of $7,348 in early June, was fuelled by computer-driven speculators and long liquidation by Chinese hedge funds, said Gianclaudio Torlizzi, Partner at consultancy T-Commodity.
“Many people are wondering if the long-term bull market is over. I don’t think it’s over but copper has to hold above $6,200, which is the watershed level for the long-term uptrend,” he said.
“It doesn’t make any sense to have such a gloomy sentiment on metals demand. This is a good opportunity to go long again,” Torlizzi added, saying he had already taken a long position.
Three month copper on the London Metal Exchange fell as much as two percent to $6,221 a tonne, its lowest since July 25, 2017, before recovering to a bid of $6,328, down 0.3 percent, after failing to trade in official open outcry activity.
LME copper shed nearly five percent in the week, putting it on track for its steepest weekly drop since the week ended November 20, 2015.
Supporting copper was news that negotiations be- tween workers and BHP Billiton Plc at the Escondida copper mine in Chile, the world’s largest, are “far from reaching agreement” with less than three weeks to go before the negotiation dead- line.
LME zinc was also bid up one percent at $2,727 a tonne in official rings, sup- ported by a report from state Chinese research institute, Antaike saying zinc production in China would decline to its lowest level since 2015 in the third quarter, accord- ing to a note by Commerz-bank.
LME nickel slipped 2.1 percent to a bid of $13,900 a tonne.
“Nickel remains the only long of the (LME) complex, however this has retreated to seven percent of open interest on our estimates, down from the 33 percent peak in early June,” Alastair Munro at broker, Marex Spectron said in a note.
LME aluminium traded down 0.4 percent at $2,071 a tonne in official activity as Chinese alumina refiners cut production.
Lead was bid down 1.6 percent at $2,318 a tonne and tin shed 0.4 percent to trade at $19,330.