Copper prices fell -0.7% and closed at 706.25, driven by the strong dollar and cautious manufacturing sentiment in China, the world’s largest copper consumer. Strong labour data from the United States and hawkish remarks from Fed Chair Powell supported the strengthening of the dollar, which affected the purchasing power of important importers and raised benchmark borrowing costs that are vital to business operations.
China manufacturing the purchasing manager’s Index (PMI) data for January showed the fourth consecutive contraction, posing challenges to the country’s industrial sector.
Chinese factories deferred buying copper, which resulted in a sharp rise in stockpiles in major Chinese warehouses. Which increased by over 120% year-to-date to nearly 70,000 tonnes. Sustained this decline in the Yangshan copper premium.
The Caixin China General Manufacturing the purchasing manager’s Index (PMI) unanticipated continued to rise in January, coming in at 50.8 despite official data to the contrary. This was the 3rd consecutive month of growth. This was in contrast to official statistics, which indicated continued weakness prior to the Lunar New Year celebration.
According to preliminary data released in January. Global copper mine production increased by 1% during the first 11 months of 2023.
The market saw new selling, closing at 6419 after an impressive 11.02% increase in open interest. Right now, 702.2 is the level of support for copper prices. And a breach there could trigger a test of 698.2. Resistance on the upside is seen at 711.9. A move above here could drive prices as high as 717.6.