NEGOTIATOR’S TAKE: Falling Copper costs means opportunities to negotiate lower prices for electric motors, wiring, and plumbing components.
05.13.16 – Copper loses 3.7% of its value
COMEX Copper futures ended Friday’s session nearly unchanged at $2.074 per lb., but over the week, the commodity lost 3.7% of its value as a climbing greenback and new economic malaise in China dented demand for the metal.
The US dollar has been on an upward trajectory so far in May, and this has put all dollar-denominated commodities under pressure. When the US dollar ascends, it makes copper relatively more expensive for would-be international buyers. The US dollar has garnered support from some positive economic data, which supported that the world’s largest economy is on the right track. The latest data included the largest monthly retail sales increase in a year (April), while April consumer sentiment was the best since last June.
New loans issued in China a contributor
The metal’s downside was given further impetus from some disappointing economic data from top consumer China. The latest data showed a sharp decline in new loans issued last month. In April, the People’s Bank of China issued 55.6 billion yuan worth of loans, well below the 900 billion yuan economists were expecting and a sharp decrease from the prior month when 1.37 trillion yuan of new loans were issued. There is a whole batch of Chinese economic data due in the coming days including fixed asset investment data, industrial production, and retail sales all due. Copper could see a great deal of action on Monday when trading resumes.
On the London Metal Exchange, Friday in itself was a better day for the commodity with copper futures rebounding after touching a 2-1/2 month low. LME copper ended Friday’s session fractionally higher at $4,627.50 per ton after touching $4,594 per ton, its lowest price point since February 25. LME copper has already declined 8% in May.
SOURCE: Economic Calendar.com
AUTHOR: Donald Levit