- Copper prices tumbled 3% on Wednesday to the lowest level since mid-February.
- The abrupt selloff began in Europe and kept on going. Market conditions were thin with many markets on holidays.
- US ISM manufacturing index fell to the lowest level since October 2016. The Commonwealth Bank says this “adds to commodity demand concerns” following soft Chinese manufacturing data released earlier in the week.
Doctor Copper is looking a little ill, tumbling to the lowest level since mid-February on Wednesday.
The four-hour chart below from Investing.com shows the abrupt selloff seen over the past 24 hours.
The selling began in Europe and kept on going, seeing it break out of the trading range it had been stuck in since the latter parts of March.
“Supply news was also a headwind for prices,” said analysts at ANZ Bank.
“Codelco said that it plans to restart some operations at its Chuquicamata operation in Chile after a four month stoppage. This saw copper futures come under pressure.”
With most European markets on holidays, thin market conditions, along with technical selling after breaking below previous support, likely exacerbated the move. A modest rebound in the US dollar following the US Federal Reserve’s FOMC interest rate decision, along with a late selloff in US stocks, may have also been a factor.
Data revealing US manufacturing activity slowed sharply in April also did little to help sentiment, according to the the Commonwealth Bank.
“The US ISM manufacturing index fell to 52.8, down from 55.3 in March and well below forecasts of 55,” said Viveh Dhar, Mining and Energy Commodities Analyst at the bank.
“The decline in export orders and imports suggest that trade issues are impacting the US manufacturing economy.
“The weaker US manufacturing result adds to commodity demand concerns already weighed down by disappointing manufacturing growth in China last month.”
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