Despite Copper’s Rise, Traders Still Bearish
Copper futures rose Monday trading above $3.80, after China reported positive import data and on hopes for progress on the European Debt Crisis. Yet, traders and analysts still see more price pressure on the industrial metal.
"When there’s any good news in China we’ll rally," said Eric Reyes, an executing copper broker for William J O’Reilly, at the New York Mercantile Exchange.
Over the weekend, China’s General Administration of Customs reported a sharp rebound in apparent copper demand in December, as imports rose 18.3 percent in December to a record 406,927 metric tons, after two years of negative trends
Still, Reyes expects the industrial metal will continue to remain under pressure, as worries about the European debt crisis and the risk to the global economy will trump any near-term uptick in demand from China.
"As soon as any bad news comes with the euro," Reyes said," Immediately we’ll drop." Reyes is not alone.
In a research note to clients Monday, Bank of America Merrill Lynch technical strategist MacNeil Curry wrote the correction in copper appears to have run its course. So far in January, copper futures have gained more than 10 percent, after a falling nearly 20 percent in 2011.
Still, Curry remains bearish copper, seeing renewed downside. "We have seen the gains of the past month as temporary and counter trend," he wrote.
Similarly, CNBC contributor Dennis Gartmen would take advantage of recent gains, to sell his copper position Monday.
"We have been quite bullish of copper, but copper traced out a ‘reversal’ on Friday," he wrote in the Gartmen Newsletter referring to technical indicators. "We can see nearby copper making its way back down toward $3.47-3.52, and we’ll be aggressive buyers again there."
At the Nymex, trader Eric Reyes is looking for an even lower re-entry point. "I have a feeling that there’s going to be a drop and opportunity to buy. Anywhere from $3.25 to $3.50 I definitely will buy it."
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