After prices fell on worries about weak demand, copper rose yesterday by 0.41% to close at 742.2. After China’s reopening, investors were unimpressed by the volume of purchases made there. Given the lack of demand for physical delivery, the Yanghsan copper premium has been more than cut in half since mid-March to $23 a tonne. In the meantime, predictions of domestic demand were hampered by the United States’ weak growth and anticipation of tighter Fed policy.
Inventory levels dropped to 56,000 tonnes, the lowest level since 2005, according to statistics from the London Metal Exchange, maintaining a floor under prices. The state-owned Codelco company in Chile further stated that after a 10.6% fall in 2022, output is expected to decline by as much as 7% in 2023. The International Copper Study Group (ICSG) reported in its most recent monthly bulletin that the refined copper market had a 103,000-tonne surplus in January as opposed to a 10,000-tonne surplus the month before.
According to the ICSG, the world produced 2.27 million tonnes of refined copper and used 2.16 million tonnes. Even while China’s economy struggled to fully recover despite the nation’s retreat from its zero-COVID policy, industrial firms’ profits nevertheless declined at a double-digit rate from January to March.
Technically, the market is in short covering mode as evidenced by the market’s drop in open interest of -2.36% to close at 5491 while prices are up 3.05 rupees. Currently, copper is receiving support at 734.7 and a move below could result in a test of 727.1 levels. Meanwhile, resistance is now more likely to be seen at 746.4, and a move above could result in prices testing 750.5.
