Weekly Blog: Price Rebounds, Supply Dynamics & Weekly Analysis

·     LME Copper prices closed positively at $9930, rebounding from a one-week low. Dovish hints from the Fed and a weaker-than expected US jobs report pressured the dollar, impacting the purchasing power of key consumers.

·     Still, the metal was set to book losses last week, momentarily halting the rally that took prices to a two-year high above $10,000 on last Monday as markets assessed the extent of threats to supply and bullish long-term demand.

·       Chinese copper producers are looking to export around 100,000 metric tons of metal, the highest amount in 12 years, in an effort to dampen a surge in prices that has impacted their order books.

·    The global refined copper market anticipates a surplus of 162,000 tons, according to the International Copper Study Group (ICSG).

·       Grupo Mexico’s Southern Copper forecasts a production exceeding 1 million tons of copper by 2027.

·   Goldman Sachs raised its year-end copper target to $12,000 per ton from $10,000, citing increasing scarcity and a projected larger deficit in the market.

·    Copper inventory on the Shanghai Futures Exchange (SHFE) witnessed an inflow of 842 metric tons this week, warehouse total stocks to 288,340 metric tons, compared to 137,095 metric tons during the same period last year.


At the start of the week, Copper may find support as investors return after Labor Day, with Chinese stocks rising alongside global markets. Softer US jobs data suggests a potential for the Federal Reserve to cut interest rates twice this year, while domestic Caixin data indicates strong private sector growth in China for April.

Throughout the week, China has seen a surge in copper exports to a two-year high, driven by smelters seizing the opportunity of rising global prices. Despite typically being a net importer, China’s decision to ship out refined copper is attributed to low treatment fees and sluggish local demand, leading to challenges for smelters. This dynamic could potentially exert upward pressure on copper prices.

This week is relatively quiet in the US, with only the Michigan consumer confidence index and speeches by Fed officials worth attention. Additionally, China will be in focus with foreign trade, inflation rates, and new loan data.

Long positions in copper surged by 7%, reaching 95,360 lots, the highest level since data collection began. Similarly, bearish positions saw a slight 2% increase during the reported week.  The bull-bear ratio for copper stands at 2.40, indicating a significant bullish dominance in the market for the metal.

On the weekly chart, copper is encountering resistance at Rs. 875 per Kg., which coincides with a key Fibonacci level. A breach below Rs. 843 per Kg. could trigger some downward pressure. Key resistance zones are identified at Rs. 875 – 888 per Kg., while support levels are positioned at Rs. 843 & Rs. 820 per Kg on MCX.

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