Copper price fell half a percent on Tuesday on a stronger dollar, rising inventories and weak data in the metal’s biggest consumer, China.
After the official manufacturing PMI reflected a contraction in May, trade data for the period pointed to a 7.1% annual drop in imports of copper ore turnover despite the surge in prices, as refiners have been using scrap to support output.
Consequently, Chinese inventories rose to their highest since 2020, beating seasonal factors that favor a drawdown.
This made the price of deliveries from Shanghai bonded warehouses remain at a discount to LME for one month. Still, price were 13% higher year-to-date amid speculative bets of looming shortages.
Copper’s role in electrification through grid-scale energy and data-center infrastructure pinned speculation, magnified by the difficulty of starting new projects for fresh ore supply.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange (SHFE) (CU-STX-SGH) are at more than four-year highs and copper spot premiums in China remain weak. (SMM-CUYP-CN)
Adding to this, China’s yuan fell against the U.S. dollar to its lowest in nearly seven months as investors returned from a long weekend break to play catch-up with broad dollar strength in overseas markets.
Further worsening sentiment, iron ore futures in China fell to a two-month low on Tuesday amid concerns over demand prospects while copper stocks in LME-registered warehouses rose. Inflows of 2,200 tons lifted stocks to 127,325 tons, their highest in more than three months.
Technical Outlook – Copper Price
Copper price settled at 858.15, down 0.56% compared to previous day’s close of 862.95. Prices continued under in pressure since 21 May 2024. Dropped from the peak 945.90 to recent low 850.05.
Formation of a high wave candle stick is indicating of a indecisiveness in a near future. On the downside, immediate support is seen at 845.00-835.
On the upside, immediate resistance is seen at 865.00-8880.00
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Commodity Samachar
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