FxWirePro: Copper short call stopped out over supply fear

Our previous two short calls, one short term, and one medium-term were stopped out as the market fears a lack of supply in 2017 in the market. We recommended going short in copper at $2.5 and at rallies and at $2.65 per pound with targets around $2.15 and $2.48 respectively. We had recommended a larger stop loss around $2.73 due to current volatility but both the calls were stopped out today as the miners in Chile rejected a management offer and the strike would continue. Chile is the largest producer of the copper and the concerned Escondida mine produces 6 percent of world copper and is owned by BHP Billiton.

BHP Billiton also revised its production outlook for 2017 to 1.2 million tons, which is 2 percent lower than the previous estimate. In addition to that, the company said that the production was lower by 7 percent for six months to December.

Workers at the concerned mine are expected to vote on a new wage proposal and that by January 31st. We as of now would prefer to stay by the sidelines as our bearish fundamental outlook on China force us to refrain from going long in copper.