As news and speculation continue to swirl about potential domestic consumer-based stimulus being announced at China's third plenum in July, industrial metal prices have failed to generate any material gains, TDS Senior Commodity Strategist Ryan McKay notes.

Physical demand base metals is low

“Downside momentum has proven resilient despite these lingering hopes as our gauge of commodity demand continues to weaken amid a precarious global macro landscape.”

“Inventory levels of Copper continue to surge in China, while local premiums remain low, signaling little sign of physical demand to back to euphoric positioning in the West. Top SHFE traders have also liquidated their long positions recently and have now taken a net short overnight.”

“AUM for base metal specific ETFs have also notably declined, while money manager positioning is also starting to reverse. CTA positions remain safe with a large margin of safety before the next selling trigger, however as momentum eases the level is drifting closer to market at $9,298/t.”