Copper Update: Have copper prices stopped their recent rally?

Copper Update: Have copper prices stopped their recent rally?

Copper prices fell by more than one percent. Price pressure came from a stable dollar that fuelled gains, but expectations of strong demand from the energy transition and new technologies and concerns about shortages supported sentiment.

A stronger U.S. currency makes dollar-priced commodities more expensive for holders of other currencies, which would subdue demand. This relationship is used by funds which trade using buy and sell signals from numerical models.

Adding to this Indonesia’s announcement that it would extend copper concentrate export permits for Freeport Indonesia, which will help ease shortages, also added in sentiment.

Benchmark copper HG1! on the London Meal Exchange (LME) was down 1.4% at $9,892 a metric ton at 1606 GMT. Prices hit a two-year high at $10,208 last week, coming close to the record high of $10,845 a ton touched in March 2022. MCX Copper settled at 854.50, down 1.21%.

Expectations are for shortages to be a feature of the market for some years as demand from electric vehicles and new technologies such as artificial intelligence and automation accelerate.

In the short-term, however, concerns about demand in top consumer China are a focus.

Sluggish Chinese demand is reflected in copper inventories at warehouses monitored by the Shanghai Futures Exchange climbing to above 287,000 tons from around 33,000 tons at the start of this year.

The Yangshan premium dropping to a record low near zero in April is an indication of China’s fading appetite for copper imports. China has copper resources, but not enough for its needs and is typically an importer.

Technical View – Copper Prices

Copper prices retreated from the day’s high and settled at 854.6, down 1.20%. prices continued trading downward from the peak of 876.45, that was touched on 29 April 2024.

Formation of two similar candle stick on the above chart is indicating for a bearishness in near future. And any rise towards 862-864 is likely to attract selling activities for the target 850-845.

On the upside, massive resistance is seen at 878.00 a break above only prices will touch new high towards 885-900.0

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