The recent weakness in industrial metal prices may be offset by potential new Chinese stimulus measures, according to TDS commodity strategists. Despite a weakening global macro landscape and decreasing commodity demand, optimism surrounding the upcoming July third plenum in China is providing some support for metal prices.
The demand side of the commodity market is beginning to weigh heavily on metals as the initial excitement from early summer fades. In particular, Copper is facing significant pressure from idiosyncratic factors, such as positioning, which could lead to further downside in the near future. However, some optimism remains for the Red Metal as the CTA front suggests that length could be added back at prices above $9,769/t.
While Copper may be facing challenges, other industrial metals such as Aluminium, Zinc, Lead, and Nickel have been able to withstand the pressure without triggering CTA selling. These metals could see modest buying on the recovery, with potential triggers to the upside. This resilience in the face of weakening demand suggests that these metals may have some support moving forward.
The potential new Chinese stimulus to be announced at the July third plenum is seen as a positive development for industrial metals. This news has provided some optimism for metal prices, which have been facing pressure from a weakening global macro landscape. As the demand side of the commodity market begins to weigh heavy on metals, the upcoming stimulus could help provide some support and potentially boost prices in the near future.
Although Copper is facing challenges due to idiosyncratic factors, such as positioning, there is still some hope for the Red Metal. The CTA front suggests that length could be added back at certain price levels, which could help stabilize Copper prices in the near-term. Additionally, other industrial metals like Aluminium, Zinc, Lead, and Nickel have shown resilience and may see modest buying on the recovery. This suggests that there is some optimism for these metals despite the overall weakening environment.
In conclusion, the industrial metal market is facing challenges from a weakening global macro landscape and decreasing commodity demand. However, the potential new Chinese stimulus announced at the July third plenum could provide some support for metal prices and help alleviate some of the recent weakness. While Copper may be facing pressure from idiosyncratic factors, other industrial metals are showing resilience and could see modest buying on the recovery. Overall, the outlook for industrial metals remains uncertain, but the upcoming stimulus could help provide some optimism for the market moving forward.
