Copper is trading at 302 cents per pound, down 1.1% on the day showing traders do not have high hopes for the monthly trade figures that are due from Beijing. On Monday, the HSBC survey of Chinese manufacturing came in at 48.1, when analysts were expecting a reading of 48.4. Any reading below 50.0 indicates the sector is in contraction territory.
China is a major importer of copper, and the country accounts for 40% of global copper imports. If traders feel that China’s appetite for the red metal is low they often sell in advance of the announcement.
Overnight China will report the trade figure for April, and the consensus is for a trade balance of $15.2 billion. Imports are anticipated to improve from last month but exports have already declined in the past two; will this be the third straight month of declines?
If China reveals soft trade figures we could see copper fall below the 300 cents per pound mark, last seen in April. On the upside, the metal could target the more recent high of 307 cents per pound.