Banks Cutting Off Chinese Real Estate Sinks Copper
Today’s Spotlight Market
Copper futures faced some pressure yesterday due to concerns over Chinese demand for the metal.? The official Shanghai Securities News reported that some banks in China have tightened their real estate loans.? The publication indicated that companies in industries related to construction, such as steel and cement, are having a more difficult time getting loans from banks.? This suggests that Copper demand could be softer than expected.? Also, it appears that private sector banks are following the lead of the central government In trying to curb the real estate market.
Fundamentals
Shanghai inventory data seems to confirm that firms are having some difficulty obtaining loans.? Construction accounts for roughly 40 % of Chinese Copper demand. Shanghai Copper inventory levels have increased for a second consecutive week.? Shanghai Futures Exchange inventory levels have risen to 9-month highs as of February 21.? LME inventory levels fell to 162,125 tons, which are 14 month lows, signaling that supplies may be shifting from London to Shanghai. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the May Copper contract trading up to 3.300 before falling back.? Prices were unable to hold the 100 day moving average, which comes in just below the 3.300 mark.? The RSI indicator was showing overbought levels, which likely contributed to the weakness.? The momentum indicator has been relatively flat, even as prices and the RSI indicator rise.? This may be viewed as negative in the near-term.
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