What about copper?

Ahura Chalki

Market analyst – HotForex

Changes always creating opportunities. One of the latest lessons from nature we learned is the importance of healthy life and green energy. The global transition to green energy, especially after the COVID-19 pandemic, sent the copper to its 11 years high, but how?

When everyone was about cryptocurrencies and trading or investment opportunities, many people were unaware of industrial and precious metals. Besides copper, Nikkei rose to its highest level since 2014, as well.

In crises, we have the beginning, challenging time, and transition. Commodity-based shares and assets need to be sell in the beginning and buy deep in a challenging time. Because when it comes to recovery, production will go with full capacity, and we need more raw materials. However, when it comes about bigger changes, the value and importance of raw materials also change. In Citi group and JPMorgan, Wall Street analysts, like many other investment institutes, predicted a new commodity “supercycle,” where demand streaks ahead of supply, creating a prolonged rise in prices.

Shifting the consumer’s habits or even compulsion to the green energy from fossil fuels, raising the demands for Copper, which will be used more in wiring and electronic cars. We should not forget about renewable energies, such a Wind and Solar Energy, and all that means more demand for copper. “Overall copper demand could double over that time, according to miner Glencore.”

“We expect to see a stunning economic upswing and a supportive environment for the copper market and investors as the year unfolds,” said Brian Kloss, a portfolio manager at Brandywine Global, part of Franklin Templeton. “Longer term, copper is an important component in renewable energy and electromobility.” (FT)

And supply?

According to “CRU” data, after decile in production in 2020, expecting the 3.1% growth in 2021. “The growth could be higher, but we anticipate that it will be difficult to operate in a 100% normal way. COVID-19 effects such as workforce reductions and the postponement of activities will have effects on production,” CRU base metals analyst Eric Heimlich said during a webinar organized by Chilean mining association Sonami. (bnamericas.com).

After all, how quickly the economy will return and developed will make the real demand for next years.

Technical review:

Copper in the daily chart clearly moves in the OB zone, as RSI at 87 and market volume is rising; however, since the price is above main MA lines and a trend line, it supports the uptrend in the daily chart with correction possibility. PP at 4.255 is a key level, while the 11-year high at 4.3727 is R1. On the other hand, H1 charts show that the new HH is lowering, while RSI is falling towards 60 and OBV is flat, which confirms short-term correction to reach the S1 4.20, breaching under PP is necessary.


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