Copper
The demand for copper as a global growth commodity has been very strong since last year. It was hardly anytime into the world-wide lockdowns before investors starting building into long copper positions. Dr Copper has been signalling vaccine optimism for sometime. However, getting into this trade has proven to be more difficult since it has had few pullbacks.
Citigroup see Pullback ahead
One aspect that confused me has been a little copper weakness last week as oil and indices were pushing higher. So, being asked about copper recently that brought my attention to a piece on Bloomberg drawing from a Citigroup report. They see potential for copper pulling back in the next couple of weeks on:
- Weakness in China's PMI and downturn in nation's credit.
- Potential for local lockdowns to harm sentiment
- Possible spreading of more serious coronavirus mutations
However, the above are all opportunities for dip buying according to Citigroup because
- Good data from the developed world's construction, consumer goods and automotive sector considering the lockdowns
- Bank sees copper average of $7,800 a ton.
The article did not mention the green tech demand for copper, but that is another upside pressure for copper going into 2Q onwards.
