While industrial metal prices found some support, the hopes for fresh Chinese stimulus are failing to generate any material upside for the time being, TD Securities Senior Commodity Strategist Ryan McKay argues.

Chinese stimulus fails to push industrial metals up

“Our gauge of commodity demand is weakening amid a precarious global macro landscape, and our return decompositions across the complex confirm the demand side is finally starting to weigh heavy on the metals as the early summer euphoria fades.” “Inflows into broad commodity ETFs throughout May had lifted the complex, but an easing of inflows and modest outflows have also started to weigh on the base metal complex. In this sense, AUM for base metal specific ETFs have also notably declined.” “For Copper, our return decomposition framework is also showing a major drag from idiosyncratic factors, such as positioning, which suggests that the Red Metal could still be prone to additional downside in the near-term as bloated positions are cut. Copper could see some length added back at prices above $9,854/t.”