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Copper Rallies on Traders Expecting Global Deficit to Worsen

July 18, 2017 at 16:51 by Andrew Moran

Copper futures are trading in green territory for the second straight session as investors expect the red metal’s global deficit to worsen by the end of the year. With work stoppages to occur at some of the world’s biggest mine, copper prices are trying to post some modest gains.

September copper futures rose $0.01, or 0.50%, to $2.73 per pound at 16:36 GMT on Tuesday. Copper prices are trading at their highest levels in four months, thanks to a plethora of positive economic data in China and a tumbling US dollar.

The Chinese government announced on Monday that industrial production climbed 7.6% last month, beating initial projections of 6.5%. This is big news considering that China is the biggest consumer of copper. Meanwhile, the US dollar slipped to a 10-month low to kick off the trading week, and the greenback has dipped 0.59% on Tuesday. A lower dollar is good for dollar-denominated commodities like copper because it makes it cheaper for foreign investors to purchase.

A new Reuters report suggests that the global copper deficit could expand sometime this year because of potential worker strikes at more mines in the coming months. Over the next month, various East Asian and South American copper mines are bracing for more strikes, which is a boon for the red metal. Experts are warning, however, that they may not be as severe as some traders may expect.

We will mostly likely see more disruptions later this year … but they are not to be as severe, and the price impacts should be largely priced in.

Year-to-date, copper has advanced more than 8%, continuing the momentum it started late last year.

Other metals are also rallying on Tuesday. August gold futures surged $8.10, or 0.66%, to $1,241.80 per ounce. September silver futures climbed $0.15, or 0.97%, to $16.25 an ounce. October platinum futures jumped $0.30, or 0.03%, to $930.60 an ounce. September palladium futures slumped $0.90, or 0.10%, to $864.65 per ounce.

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