Copper: Supply risks suggest near-term upside - TDS

Analysts at TD Securities suggest to buy copper in anticipation of a near-term potential short-covering rally as supply risks loom ahead.

Key Quotes

“With the labour negotiation period at Escondida set to end this Wednesday, with no deal in sight, the red metal could be poised to catch a fundamental bid off the trade-war induced bottom.”

“Even with trade war fears putting demand estimates at risk, a prolonged outage at the world's largest copper mine would lessen that blow and suggest prices can move higher.”

“Further, the PBoC is set to stimulate the Chinese economy and the USD remains under pressure amid President Trump's desire for a weaker currency, which should provide additional support.”

“We believe the base metal rout may be nearing an end. With plenty of spec firepower on the sidelines and a buildup in shorts, a supply side disruption could be the catalyst needed to induce a bout of short covering and see some longs regain interest.”