Copper Gains Amid Expectations Chinese Economic Policy Support

SEATTLE (Scrap Monster): The recent uptick in copper prices, with a marginal increase of 0.01% settling at 732.65, can be attributed to several factors. Foremost is the anticipation of Chinese economic policy support, coupled with concerns over supply disruptions due to shipping issues in the Red Sea. The International Copper Study Group (ICSG) reported a refined copper market deficit of 53,000 metric tons in October, a slight improvement from September's 56,000 metric tons deficit. 

In October, global refined copper output stood at 2.34 million metric tons, while consumption reached 2.39 million metric tons. Adjusted for inventory changes in Chinese bonded warehouses, there was a 52,000 metric tons deficit. Supply challenges have further fueled the price surge. The Cobre Panama mine suspension, accounting for 1.5% of the world's copper supply, stems from disputes with the Panamanian government. Concurrently, strikes at the Las Bambas mine in Peru and potential activity suspensions in BHP's Chilean mines have contributed to the tightening supply. These short-term disruptions coincide with growing concerns that global copper output may struggle to meet the rising demand for the metal in carbon-free technologies, prompting key funds to increase long positions. 

From a technical standpoint, the market shows signs of fresh buying, evidenced by a 0.82% increase in open interest to 5034. Prices have risen by 0.1 rupees. Support for copper is evident at 731.3, with a potential test of 729.9 if this level is breached. On the upside, resistance is likely at 734.7, and a move above could lead to a testing of 736.7.

Courtesy: www.investing.com