Copper prices experienced a notable recovery, closing up by 2.65% at Rs 1,315.2, bolstered by a depreciating U.S. dollar and a more optimistic outlook on demand following China’s indication of new initiatives to enhance domestic consumption. China’s cabinet deliberated on a suite of fiscal and financial measures designed to bolster household expenditure and investment, thereby enhancing projections for increased metal demand in 2026.

Prices were further supported by supply-side constraints, as production at Chilean state-run miner Codelco decreased by 3% year-on-year in November, while output at BHP’s Escondida mine fell by 12.8%, thereby tightening near-term availability. The premium of LME cash copper over the three-month contract has expanded to $55, marking a five-week high, indicative of the current tightness in the market. Further backing was derived from anticipations concerning consolidation within the mining industry, as market focus shifted towards the possibility of merger discussions between Rio Tinto and Glencore.

Nonetheless, the increase in prices was limited by escalating inventories in China, as evidenced by a more than 24% rise in copper stocks on the Shanghai Futures Exchange, while smelters persisted in exporting excess material in the face of resistance to elevated import premiums. Goldman Sachs has adjusted its copper price forecast for the first half of 2026, highlighting the influence of scarcity premiums beyond the US. However, the firm anticipates that maintaining elevated prices will prove challenging.

From a technical standpoint, the market is experiencing new buying activity, as evidenced by a 2.93% increase in open interest coupled with a Rs 33.9 rise in price. Copper exhibits immediate support at Rs 1,295.7, with additional downside anticipated around Rs 1,276. Resistance is positioned at Rs 1,329.9, and a breach of this threshold may pave the way toward Rs 1,344.4.