The world’s biggest copper consumer, China, had higher demand expectations, which caused copper prices to jump by 2.15% and settle at 936.5. In an effort to reduce oversupply and lessen developer defaults, the Chinese government recently announced that it would buy unsold housing inventory.
This is one of Beijing’s most important economic activity-boosting initiatives. Given that copper is essential to many electrification projects, such as grid-scale energy storage and data centre infrastructure.
This action, along with a sizable CNY 1 trillion stimulus through long-dated bond issuance targeted primarily at infrastructure, has strengthened bullish sentiments regarding copper consumption. The expected rise in copper demand is compare with supply-side limitations.
Furthermore, as large mining companies are more inclined to pursue mergers and acquisitions than new project developments due to exorbitant project costs, as demonstrated by BHP’s resurrected attempt to buy Anglo American (JO:AGLJ), expectations for new mine supply are waning.
The Chilean Copper Commission. Which cited supply shortages, increased its average copper price projections for this year and next, adding to the positive outlook. According to Cochilco’s latest forecast, average copper prices will rise to $4.30 per pound this year from $3.85 and $4.25 per pound the following year from $3.90. According to their projections, there will be a 364,000 metric tonne copper supply deficit this year and a 278,000 tonne deficit in 2025.
Technically speaking, the market for copper is showing signs of short covering as evidenced by an 11.88% decrease in open interest to 4,695 while prices rose by 19.75 rupees.
Copper is currently finding support at 925.3; a drop below this mark could take it as low as 914.1. Resistance on the upside is seen at 942.6; a move above this mark may drive prices up to 948.7.