Gains in copper are due to supply issues

As stockpiles in London Metal Exchange (LME) warehouses fell to 56,800 tonnes, the lowest level since 2005, supply concerns caused copper to end yesterday up 0.96% at 782.5. The global physical inventories have reached their lowest point in 14 years, according to Goldman Sachs (NYSE: GS), and the copper supply market is still experiencing a severe shortage.

Because of the long-term energy shift, there will be a constrained supply and high demand for copper, which will raise the price of the metal. The output of copper cathode in China increased to 951,400 mt in March, up 43,600 mt or 4.8% from the previous month and 12.1% from the same period in 2022, according to data. In comparison to the anticipated 949,500 mt, the actual output was 1,900 mt greater.

From January through March, the output reached 2.71 million mt, up 210,200 mt or 8.4% from the same period last year. The real output in March did not decrease despite the maintenance of three smelters because these smelters had enough raw materials refilled. The total output in March climbed considerably as a result of the expansion of a smelter in central China.

Technically, the market is being short-covered as open interest has decreased by -5.85% to settle at 3397 while prices have increased by 7.45 rupees. Currently, copper is receiving support at 774, and a move below that level could result in a test of 765.5 levels. Meanwhile, resistance is now likely to be seen at 787, and a move above that level could result in prices testing 791.5.

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