Copper prices rose by 1.15% to 869.75, as markets weighed supply shortages against strong near- and long-term demand indicators. Market sentiment was further supported by the change in China’s Politburo rhetoric. Which suggested deeper worries about the nation’s property crisis and sparked rumours of rate cuts and quantitative easing.
The world’s largest copper producer, Chile, released production data that painted a mixed picture. Production was rising at mines like Escondida and Collahuasi, but declining at Codelco.
But losses in major mines have created doubts about the availability of copper ore. Which could lead to a 10% reduction in output by Chinese smelters, who account for more than half of the world’s supply.
The market dynamics were also revealed by the inventory data; for example. The slight decline in copper inventories in domestic bonded zones after Labour Day was indicative of concentrated deliveries.
Regional differences in supply and demand dynamics are highlight by the fact that inventories in the Guangdong bonded zone increased while those in the Shanghai bonded zone decreased.
Technically speaking, there was short covering in the copper market as shown by a 3.92% decrease in open interest and a 9.9 rupee price increase. Copper’s key support levels are located at 861.7, and a downside test could take it as low as 853.4.
On the other hand, resistance is expect at 878.5. And a breakthrough there could result in additional price testing at 887. This technical analysis points to a bullish attitude that is bolster by a rise in buying activity in the market.