Dr. Copper is Sick

As the US-China trade war rhetoric continues to heat up, with both countries enacting another round of tariffs upon one another, copper ($CPER and $HG1!) continues to take it on the chin. Consequently, for the first time since 2017, copper has closed down below its key weekly support level of $2.6225, a multi-year low for the industrial metal.

To pour more salt on its wounds, the metal is also seeing global inventory build up as well. Inventories have risen by 25 percent over the last three months, and now sits at roughly 500,000 tonnes. This build up can be attributed to one key thing: China. Since January 2019, Chinese imports for the metal have fallen over 12 percent, further lending support to the fact that the Chinese economy continues to slow down.

As the global economy slows, we see global demand for copper continuing to fall in the later half of 2019. Given this trend, if $HG1! fails to re-take its level of $2.6225, we see Dr.Copper needing medical attention, as we estimate prices to fall further to its monthly support level of $1.9435.

Copper continues its downward spiral as the global economy continues to slow.

Copper continues its downward spiral as the global economy continues to slow.