Copper prices rose marginally, settling up by 0.42% at 715.4, aided primarily by disruptions in mine-side operations. Notably, smelters’ desperate attempts to find raw materials have resulted in a drop in copper prices in China. Which could threaten the margins of Chinese companies and possibly lower their output of refined copper.
Surprising the markets, the People’s Bank of China (PBOC) kept the rate on its one-year medium-term lending facility at 2.5% even though it increased injections of liquidity.
This move highlighted the central bank’s balancing act between growth targets and market pressures. As it defied expectations for additional policy easing to support economic growth.
Declines in producer prices in December of 2.7% and consumer prices of 0.3% respectively show that China is facing deflationary pressures.
Investors are now looking forward to key economic indicators such as Q4 GDP figures. Industrial output, and sales at retail for December to gain a better understanding of the state of China’s economy.
The International Copper Study Group (ICSG) reports that the global refined copper market had a 53,000 metric tonnes deficit in October, which is a minor improvement over the 56,000 metric tonnes deficit in September.
Technically, the market for copper is experiencing short covering as open interest dropped by 8.8% to settle at 5910.
Copper finds support at 713.9, with a potential test at 712.3, despite a slight increase of 3 rupees. Prices may test 717.7 in the event of a breakthrough, with resistance at 716.6 anticipated.