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THE HIGHTOWER REPORT
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(August 13, 1997) METALS: COPPER–Most of the critical driving factors behind the copper bull market have mitigated. The Chinese demand factor is certainly muted as outside indications are that the Chinese economy is slowing from the feverish pace of the last two years. Secondly the second half of the year seasonal demand slump is being seen at a time in which the LME stocks have managed a relentless climb. LME copper stocks currently stand at 254,350 tons up from 183,000 in March! A failure to see as expected growth in the G7 countries with almost three quarters of the year gone is another problem for the bulls hoping for a demand pull effect on prices. Finally production seems to be back on a firm pace with the only major setbacks this year, the result of a lack of water for mining purposes in isolated areas. In a near-term perspective copper prices do have a weak chart posture as well as bearish attitudes in London toward demand in the third and fourth quarters! Just how high the LME stocks climb will also determine if the current break and consolidation becomes long-term support or if prices are going to fall all the way back to 100.00 basis the September contract. Looking at the pace of Chinese imports in 1997 versus 1996 is enough to convince most traders that copper must be sold looking for at least 100.00.
For daily market updates of the Hightower Report of Comprehensive Commodity Research, call 900-225-2200, extension 5 for Metals and Energy Forecast. The cost per minute is $1.33.
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