Copper price retreated from a one-week high on Monday, pressured by data showing the global refined copper market had a 54,000 metric ton surplus in August, compared to a 73,000 metric ton surplus in July, according to the International Copper Study Group (ICSG) in its latest monthly bulletin.
For the first eight months of the year, the market posted a 535,000 metric ton surplus, a significant increase from the 75,000 metric ton surplus recorded during the same period last year, the ICSG noted. In August, global refined copper output was 2.32 million metric tons, while consumption stood at 2.27 million metric tons. When adjusted for changes in Chinese bonded warehouse inventories, the surplus was 42,000 metric tons in August, down from 63,000 metric tons in July.
Adding to the pressure, higher U.S. Treasury yields and a strong U.S. dollar offset support from growing uncertainties surrounding the U.S. presidential election and the ongoing Middle East conflict. These factors weighed on market sentiment.
Despite this, copper prices briefly climbed to a one-week high as interest rate cuts in China raised hopes for stronger demand from the world’s top consumer, amid persistent concerns about the country’s struggling property sector. Traders noted that the stronger U.S. dollar, which makes dollar-denominated metals more expensive for holders of other currencies, subdued demand and triggered profit-taking on long copper positions after the New York open.
Benchmark copper (CMCU3) on the London Metal Exchange (LME) fell 0.6% to $9,563 per metric ton, after touching a session high of $9,758 earlier in the day.
China’s latest 25-basis-point rate cut, larger than expected, followed previous reductions in other policy rates last month as part of broader stimulus measures aimed at reviving the economy. However, China’s economy grew at its slowest pace since early 2023 in the third quarter, due to weak domestic demand, slowing export growth, and a struggling property sector, which consumes significant amounts of industrial metals.
Markets are now awaiting a clearer roadmap to restore China’s economy to more sustainable long-term growth. However, some analysts believe that the current measures are more focused on stabilizing the economy rather than implementing aggressive stimulus. “The government seems well aware of these challenges and is avoiding ‘old school’ stimulus measures, particularly because of the substantial stock of both finished and unfinished property.”
Technical Outlook – Copper Futures
Copper prices retreated from a high of 832 and settled at 814.80, down from the previous day’s close of 822.25. The prices failed to sustain above the previous demand zone at 833, forming a long bearish candlestick, which indicates that any rise towards 828-830 could face selling pressure, with immediate support seen around 815-810.
Additionally, the RSI is not providing a clear directional signal at this point.
Therefore, copper prices are expected to consolidate within the 833-810 range in the near term. A break above 833 could signal a recovery, with prices potentially testing the 840-848 resistance level.
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