A declining value of the U.S. dollar is helping to support copper prices

A weaker U.S. dollar helped copper settle up 0.16% at 722.35, as traders and investors remained cautious ahead of key central bank meetings. With an eye on raising almost $2 trillion, Chinese authorities are considering a series of steps to stabilize the collapsing stock market.

The Chinese government has pledged to implement more potent measures to bolster investor confidence, such as augmenting the infusion of medium- and long-term money into the capital market. Since mid-October 2023, the amount of copper stocks in warehouses certified by the LME have decreased by 18%, totaling 156,750 tons.

With respect to metal designated for delivery, it is noteworthy that the percentage of cancelled warrants has increased to 21% from 12% on January 11. This suggests that there may be more copper escaping the LME system. According to the International Copper Study Group, the global market for refined copper had shortfall of 119,000 metric tons in November, compared with 48,000 metric tons in October.

November’s shortfall was 128,000 metric tons, as opposed to October’s deficit of 70,000 metric tons after accounting for adjustments in inventory in Chinese bonded warehouses. With a 25.16% increase in open interest to 4248 and a 1.15 rupee price gain, the copper market appears to be seeing new purchasing from a technical standpoint.

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