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E-bakır LME Bulletin  
 
 
 
 

MARKET COMMENTARY

We were not surprised to see a relative degree of stability set in over the commodity markets over the course of July, especially considering the sell-off that set in over the last two weeks in June. The big movers in terms of individual commodities were the precious metals, with gold, silver and palladium being particularly strong. Energy markets also finished sharply higher, as did product prices, and combined with the strength seen in the precious group, the two account for the bulk of the increase in the CRB index this month. 

 

 
     

Base metals trended mostly higher over the course of the month, but the ferrous group put on a more spirited run, with good gains seen in both iron ore prices as well as in the steel HRC contract. 

In the currency markets, the dollar lost ground pretty much across the board, while the S&P 500 recovered almost of June’s losses to hit new highs. The 10-year bond market saw rates spike to a fresh high of 2.76% in early July, but the market has been slightly on the mend ever since.

Although Chinese copper demand imports turned higher in June following an equally strong performance in May, questions remain about whether this metal is going to end-users or if it is instead being used as

lendable collateral in what remains a tight credit market. Certainly, recent Chinese macro numbers do not lend support for stronger intake, as they have been running on the weaker side of late, making the financing argument all the more plausible. Some investors do not expect to see much of a change in prices over the course of August and expect the low end of the trading range at around $6600 to hold, while resistance will be at $7200.

London copper edged down on Wednesday as traders cautiously looked to key economic data from China later this week for indications on the outlook for demand from the world´s top metals consumer. The world´s No.2 economy has slowed in nine out of the past ten quarters, stoking worries about its demand for commodities and dragging down copper prices by 12 percent so far this year.

"We still have a bearish view given the Chinese growth slowdown. Markets are looking towards the data tomorrow. Copper has remained quite resilient to poor U.S. economic data, but if we see negative data out of China that could weigh on prices," said analyst Tim Radford of Sydney-based adviser Rivkin.
China´s trade data is due on Thursday, with inflation, industrial output and retail sales on Friday. Exports, factory output and retail sales may have all edged up in July, according to a Reuters poll, showing initial signs of stabilisation in the Chinese economy as the government takes targeted steps to head off a sharper slowdown. 

Three-month copper on the London Metal Exchange had slipped 0.24 percent to $6,988.25 a tonne by 0908 GMT, after finishing up 0.4 percent in the previous session. Copper has been stuck between $6,600 and $7,100 since mid-June, with little prospect of prices breaking out before seasonal pre-Christmas demand ramps up in the fourth quarter.

Market players are also keeping an eye on the U.S. Federal Reserve to see when the central bank will start winding down its stimulus, a key driver of investment in global commodities. The Fed will probably reduce its massive bond-buying programme later this year, and depending on the economic data could do so as early as next month, a top Fed official who is typically among the most dovish policymakers said on Tuesday. A delayed start to scaling back bond purchases would support metals as cheap capital will then be available to investors for longer and because it undermines the dollar. A weaker dollar makes commodities priced in the greenback cheaper for holders of other currencies.

 
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