Copper prices fell 0.2% to 733.25, owing to a contraction in Chinese manufacturing. Despite a 24% decline in stocks to 146,475 tonnes in LME-registered warehouses since October, the cash discount over three-month copper agreements indicates that there are no immediate supply shortage worries in the LME market.
A major mine in Panama closed, and the availability of copper concentrate became even more scarce. As a result, the China Nonferrous Metals Industry Association (CNIA) advised copper smelters to reduce production and postpone new projects.
Based on a rise of 13.5% from 2022, China’s output of refined copper in 2023 hit a record high of 12.99 million metric tonnes, according to the National Bureau of Statistics.
Leading Chinese smelters, however, suggested reducing production due to supply issues with copper concentrate. However, no concrete plan has been decided upon.
From a technical perspective, the copper market is in a long liquidation. As open interest dropped by -2.51% to settle at 4574. Currently, 731.2 is the level of support for copper prices, and a breach below it could test levels 729. There is expected resistance at 736.5, and a move above could result in a test of 739.6.
In addition to more general economic indicators, traders should keep a close eye on these levels in order to assess the overall condition of the copper market and identify any possible supply issues.