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Copper price held quite well on Tuesday as the Asia Copper Week (ACW) kicked off in Shanghai and after a big Chinese company filed for bankruptcy. Copper was trading at $3.68 on Tuesday, about 5% above the lowest point this year. Like other metals, copper has been under pressure as it remains 15% below the YTD high and 27% below last year’s high.Maike Metals granted bankruptcyThe biggest copper news of this week is the ongoing Asia Copper Week, which brings together some of the biggest players in the industry. Copper mining giants like Glencore and BHP together with big traders like Trafigura and Vitol are attending.The event comes at a difficult time for copper. For one, its price has been under pressure this year as concerns about demand continue. Precisely, there are concerns about the Chinese economy, which is going through headwinds.The most recent economic numbers revealed that China’s economy has been struggling. Exports have fallen in the past six straight months. They dropped by 6.4% in October. Similarly, imports have been in the red in the 12 months to October.China is an important market for copper since it is the biggest buyer. As such, in most cases, weak performance of the country’s GDP translates to weaker demand. Indeed, most analysts expect that the Chinese economy will expand by less than 5% this year.Still, China has been a bright spot for copper as the country has ramped up investments in clean energy solutions like solar energy and electric vehicles (EV). Today, EV sales in China are growing at a fast pace.The other big event in the copper industry is the collapse of Maike Metals, which was one of the biggest copper trading firm in the country. A court accepted the bankruptcy filing of the company that has been struggling to deal with a mountain of debt. Copper prices reacted mildly to the collapse of Maike Metals since it was not unexpected. The company has been dealing with a huge debt burden. For example, ING, the Dutch bank, sued the company over a $147 million debt. Also, the company’s founder, He Jinbi, has been by Chinese authorities.Video Length: 00:02:15Maike Metals is not the only China’s copper company that is struggling. Amer International Group, which is owned by Wang Wenyin, has also struggled as more employees have left the firm. This is notable since Amer is the 38th biggest company in China by revenue and is responsible for about 10% of total imports.The copper market is going through turmoil as the biggest merchant banks stay away from the market.Copper price forecast(Click on image to enlarge)
The daily chart shows that the price of copper has been in a tight range in the past few days. It has risen from this month’s low of $3.50 to the current $3.70. A closer look shows that copper remains slightly below the 50-day and 100-day Exponential Moving Averages (EMA).Further, copper has formed an inverted head and shoulders (H&S) pattern, which is usually a bullish sign. Therefore, there is a likelihood that the price will bounce back in the coming weeks. This view will be confirmed if it moves above the neckline of the inverted H&S pattern. If this happens, the next level to watch will be at $4, which is about 8.6% from the current level.More By This Author:Technical Outlook: Bitcoin’s Journey Towards $40k Resistance Level Nikola Stock Forecast After The Plug Power Warning On Hydrogen Tesla Stock Price Forecast: The Case Against Elon Musk’s TSLA
