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The copper market seems to like the overall setup this morning, with the Dollar weaker, equity prices higher and for the time being overall macro economic anxiety somewhat in check. With Shanghai copper stocks last week down and the LME stocks mostly showing a pattern of daily declines, we have to leave the supply side tilt in the bulls favor. In fact, the market still generally expects Chinese demand to be a constant support to prices and in the event that equities manage an upside breakout on the charts again this week we suspect that copper prices will reach the highest level since early November. With the March 10th Commitment of Traders with Options report for Copper showing the Non-commercial position to be net short 20,091 contracts, and the Non-reportable position net long only 943 contracts, that made the “combined” spec and fund position net short 19,148 contracts as of early last week and therefore the copper market might be able to extend on the upside, off classic technical short covering buying action. With the Chinese central bank predicting higher aluminum prices ahead and the copper trade of a mind recently that Chinese copper inventories are going to remain tight, we have to think that the bull camp is set to maintain an edge in copper for the first couple days of the new week.
