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Copper Down on Falling Chinese PPI

January 9, 2014 at 18:08 by Andriy Moraru

Declining producer price index in China caused the copper futures to fall to lowest level since December 19. The Fed’s determination to taper the quantitative easing continued to press on growth-related commodities. Copper is reacting negatively to any news that may signal drop in global demand.

Despite decreasing stockpiles, copper is showing negative feedback on any significant news hinting on monetary tightening or global growth rate contraction. Today, Chinese CPI came out at 2.5 percent in December, following November’s reading of 3.0 percent and below the forecast of 2.7 percent. What is worse, PPI continued demonstrate deflation at 1.4 percent in December. The not-too-optimistic forecasts pointed at a drop of deflation to at least 1.3 percent. Declining producer prices may suggest a drop of industrial demand for copper, driving the commodity price down too.

March futures contracts for copper declined from $3.343 to $3.297 per pound or about 1.3 percent as of 18:04 GMT on COMEX today. It is the biggest one session decline on COMEX since mid-November.

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