RJO FuturesCast

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Metals

Copper Futures Impact on the Chinese Trade War

Posted 07/06/2018 8:04AM CT | Phillip Streible

There’s no doubt that the Chinese trade war has made an impact on copper prices by leaving it the second worst performing commodity year-to-date, down over 14.50%. Rising interest rates increase the cost of warehousing and financing projects which also hurts demand. Looking at the futures curve moving farther out in time does show a short-term supply issue, but it looks to be easily resolved into next year. One would need to monitor the trade war situation to see if it continues to escalate. If we see it continue, China will most likely look to Brazil for sources of copper. However, anyway you look at it this should result in lower consumption and slower demand growth for the product.

Below is a daily chart of September Copper showing the decline from the announcement of the tariffs.

Copper Sep ’18 Daily Chart

Copper Sep '18 Daily Chart

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Phillip Streible

Senior Market Strategist
Early in his career Phillip began trading his own account as a screen trader focusing on the metals, grains and stock indices. He then became a Series 7 licensed financial consultant with A.G. Edwards. Later, he expanded his trading experience into a Series 3 licensed commodity broker with Investment Analysis Group. Most recently he was a senior market strategist at MF Global before joining RJO Futures in October 2011 as a senior commodities broker. As a senior commodities broker his goal is to show clients how to anticipate, recognize and react to bull and bear market conditions through the use of technical analysis techniques that help them to define risk.
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