Copper prices fell -0.84% yesterday, setting at 715.95, amid anticipation of stronger policy measures from China to support markets. In an effort to boost the economy’s liquidity, China’s central bank conducted 14-day reverse repos worth 100 billion yuan and lowered the reserve requirement ratio for financial institutions.
The goal of these actions is to support economic growth by releasing around 1 trillion yuan of long-term liquidity. However, as China gets closer to the Lunar New Year holiday, demand there is still muted. Which is causing the copper markets to be quiet.
In addition, copper stocks in warehouses registered with the LME kept falling, hitting five-month lows, suggesting a tightening supply situation.
The Shanghai Futures Exchange’s copper inventories, which have risen 36% this week to reach their highest level since July, also show signs of slowing down. As for production, Chile, the world’s biggest metal producer, produced 495,537 metric tonnes of copper in December.
Unchanged from the previous year. On the other hand, Chile’s manufacturing output fell by 1.8% in the same time frame, indicating possible problems with domestic consumption.
In light of these underlying dynamics, the copper market’s technical outlook points to a lengthy liquidation.
The open interest rate was 5207, and prices were down -6.1 rupees. With a possible downside test at 710.4, copper Prices is currently finding support at 713.2. Resistance is seen at 720.7 on the upside, and a breakout there could take the price as high as 725.4.