Column: Copper finely poised between negative macro and robust micro – by Andy Home (Reuters U.K. – September 9, 2019)

LONDON (Reuters) – Copper last week hit a year-to-date low of $5,518 per tonne in the London market as the macroeconomic picture becomes ever gloomier. Funds remain heavily short, betting that copper demand is set to worsen amid what is looking like a synchronised downturn in the global manufacturing sector.

The copper price is starting to buckle under the weight of speculative selling pressure but it’s not yet ready to collapse. London Metal Exchange three-month copper could easily have imploded on last Tuesday’s lurch lower but instead clawed its way back to close the week at $5,833.

Market sentiment was helped by the prospect of renewed trade talks between the United States and China but also by copper’s still robust internal supply-demand dynamics, not least China’s continued appetite for imported metal.

The copper market, not for the first time, is finely balanced between the forces of macro negativity and micro positivity. The economic storm clouds darkened again last week.

U.S. manufacturing activity contracted for the first time in three years in August, the Institute for Supply Management’s (ISM) index falling to 49.1 last month from 51.2 in July. It was the fifth straight monthly decline in the index with new orders tumbling sharply to 47.2, the lowest level since June 2012.

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