The price of copper yesterday increased by 1.52% to settle at 783.45 as China’s demand has been strengthening as a result of a seasonal demand uptick and the post-pandemic economic rebound. Concerns over the availability of copper on the LME market have returned as canceled warrants or metal slated for delivery, now account for 45% of the total at 73,475 tonnes, up from 29% a week earlier. As a result, there was a premium or backwardation for cash over three-month copper contracts, which indicated that the supply and demand equation was becoming tight.
The International Copper Study Group (ICSG) reported in its most recent monthly bulletin that there was a 103,000-tonne surplus on the global market for refined copper in January as opposed to a 10,000-tonne surplus the previous month. According to the ICSG, global refined copper output was 2.27 million tonnes and consumption was 2.16 million tonnes.
According to figures from the National Bureau of Statistics, China’s production of refined copper increased by 10.6% to 1.95 million tonnes in the first two months of the year. Calculations based on government statistics show that in January and February, the average daily copper output was 33,051 tonnes. Due to unusually low stockpiles, Trafigura predicts that the price of copper will rise to a record high within the next 12 months, possibly topping $12,000 per tonne.
Technically, the market is experiencing new buying as open interest increased by 3.13% to settle at 2175 while prices increased by 11.7 rupees. Currently, copper is receiving support at 772.8 and a move below could result in a test of the 762 level. Meanwhile, resistance is now likely to be seen at 790.2, and a move above could result in a test of 796.8.
