Copper fell -0.09% yesterday, settling at 752.2, as profit booking offset earlier gains driven by shortages in China’s copper market. Prices were initially boosted by reports of possible output cuts by China’s North Copper, which came amid limited supplies of copper concentrates and cheaper processing fees.
Nonetheless, a group of Chinese copper smelters decided to reduce output in an effort to keep prices stable in the face of recent losses.
This action illustrates the careful balancing act between supply limitations and impending increases in the world’s capacity for copper smelting. Due to a lack of copper ore as a result of mine disruptions and large increases in global smelting capacity. China’s main smelters have had to modify their output schedules, maintenance plans, and project timelines.
The recent spike in stocks tracked by the Shanghai Futures Exchange (SHFE) to 239,245 tonnes by March 8 indicates continued difficulties in maintaining a balance between supply and demand dynamics, despite these efforts.
China has a significant impact on the world’s copper markets due to its dominance in the production of refined coppe. Which accounts for 47% of global output. Analysts predict that manufacturing fees for copper concentrate may increase in the upcoming second quarter. Which is customarily the busiest time for Chinese smelting maintenance.
This anticipation might moderate the downward pressure on copper prices and offer some support to smelters’ profitability.
Technically speaking, the market saw long liquidation, with a price decline of -0.7 rupees and a significant drop in open interest of -5.99%. A test of 749 is expected to provide support for copper prices, with a potential decline to 745.8 levels.
On the other hand, resistance is probably going to show up at 755.1. And a breakthrough there might drive prices all the way up to 758.