Copper prices experienced a decline in yesterday’s trading session, settling down 0.35% at 703.75. The dollar’s strength and the negative industrial sentiment prevalent in China. The world’s largest consumer of metals, were two of the factors blamed for this decline.
Strong US labour data and hawkish comments from Fed Chair Powell supported the dollar’s rise. Which decreased the purchasing power of major importers and raised the cost of borrowing money that is necessary for business operations.
The manufacturing sector in China contracted for a fourth time in a row in January. As indicated by official PMI data, Indicating ongoing macroeconomic challenges. This contributed to the unfavourable outlook for base metals.
A decline in the Yangshan copper premium and a notable increase in inventories in major Chinese warehouses resulted from factories remaining cautious despite an unanticipated boost to the Caixin China General Manufacturing PMI, which contrasted with official data.
Preliminary data released by the ICSG for the first 11 months of 2023 showed a slight 1% rise in world copper mine production. However, given the continued economic uncertainty. This increase of output did not allay worries about the dynamics of demand and the state of the copper market as a whole.
Technically speaking, the copper market is under fresh selling pressure, as shown by a -2.5 rupee prices decline and a 2.94% rise in open interest that ended at 6608 in the market.
Copper has identified support levels at 700.7 and possible downside tests at 697.6. On the other hand, resistance is expect at 707.2. And a breakout there might signal a move up to 710.6.