LME USD copper has opened December at the lowest level we have seen since August 7th (with the exception of 1 trading day on 28/11). In Australian dollar terms, we are being shielded slightly as the AUD is losing ground against the US, however from all reports this morning physical demand for metals is also beginning to dwindle.
**** DJ Copper Falls as Traders Weigh China Manufacturing Data ****
By Matt Day
NEW YORK–Copper futures fell Monday on doubts about the health of demand in top consumer China after mixed manufacturing data there.
A pair of readings on manufacturing activity in China showed the sector continued to expand in November, sparking an initial rally in copper prices when Asian trading hours began. Copper gave up those gains, however, as investors sorted through the data. Some of the subindexes of the official Chinese purchasing managers’ index, including those for business outlook and new orders, showed weaker growth. China accounts for about 40% of global copper use, making prices sensitive to shifts in economic activity there. Later, separate reports showed some manufacturing weakness in pockets of Europe. Copper is used in a wide range of factory-produced products, including automobiles, appliances and power cables. Copper was also pressured by gains in the U.S. dollar Monday, traders and analysts said. A stronger U.S. currency can limit the appeal of dollar-denominated copper futures by making them appear more expensive for holders of other currencies. Goldman Sachs on Monday said a bet on lower copper prices was among the investment bank’s top trade recommendations for 2014, arguing that supply will grow faster than demand and investors will continue to prefer holding equities rather than raw materials. China’s economic growth “we think will be stable but not stellar,” Goldman analysts wrote. Meanwhile, copper is “an asset that we think will likely be facing headwinds of its own over the course of the year.” The bank recommended clients bet on higher Chinese equities prices and lower copper prices on the London Metal Exchange’s December 2014 contract. Goldman analysts project year-end 2014 copper prices of $2.81 a pound, which would be the lowest for that time of year since 2008.