Copper Under Pressure
Copper prices are turning sharply lower today as trades digest news of Trump’s latest trade announcement. The US president actioned 25% tariffs on all steel and aluminium imports, without exceptions or exemptions. The move which comes as a retaliation against Chinese tariffs on certain US exporters represents a clear escalation in the global trade war.
Rising Trade War Tensions
Additional US tariffs are also set to be announced while traders are also bracing for countermeasures from the eurozone and other impacted trading partners, including China. With the risk of a further escalation in trade tensions, commodities prices, including copper, are recoiling on Tuesday.
Chilean Supply Issues
Ahead of the tariff announcement, copper prices had been rising firmly on news of tightening supply in Chile, the largest global producer of copper with mine repairs causing delays in the supply chain. A report from BHP this week note that Chile faces severe problems around ageing mines with massive investment ($250 billion) required to shore up the supply chain against current global demand levels.
Chinese Demand
Additionally, an uptick in demand from China on the back of the Lunar New Year holiday was also feeding into bullish sentiment. Traders now look to see whether the current pullback finds demand given these factors or if trade war concerns have taken over, paving the way for a deeper correction in copper prices.
Technical Views
Copper
The rally in copper has stalled for now with prices quickly reversing and set to test the 4.5785 level from above. Bulls need the level to hold as support to keep focus on a continued push higher towards 4.8010. If we break lower here, a retest of the broken triangle highs and the 4.30 level will be the next focus.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.