It appears that Copper has reached its seasonal peak with an anticipated drawback in consumption coming into the second and third quarter of the year. On top of this, news has broken that the Chinese government have implemented an investigation into fraudulent activity regarding copper trading.
- A recent probe into fraudulent metal- backed financing in China, is expected to weigh heavily on Copper prices.
- Currently, no comment has been made by the Chinese government yet a port operator in Qingdao (where copper imports land) has confirmed they are under investigation.
- It appears that as much as a third of all Chinese Copper imports have been used as collateral for loans from Chinese lenders. False demand has been created by taking advantage of discrepancies between offshore and onshore Copper prices.
- Precious metal shipments to China are expected to slow as officials begin to apply tighter customs checks to imports.
- The drop in confidence in industry has already impacted banks, with a scale- back in lending to the metals and mining industry, which is already suffering in terms of liquidity.
- CITIC Resources Holding Ltd has failed to secure its stockpiles of alumina stored at Qingdao, highlighting that any companies exposed to the metal financing scam could face significant losses.
- Copper prices are expected to fall by $6200 a ton by the end of this year.
- The precious metal has been trading higher in recent months based on seasonal consumption and a reduction in supply, representing a potential value investment as the Chinese probe unfolds.
- Banc De Binary analysts predict Copper prices will fall from their current value representing a potential long- term downward movement in COPPER.