Copper increased by 0.68% to close at Rs 1,168.15, as investors capitalized on the dip amid thin trading conditions. Nonetheless, the overall supply landscape continues to appear adequate. Inventories in London Metal Exchange warehouses have experienced an uninterrupted increase for 26 consecutive sessions, reaching an 11-month peak. Additionally, the total stockpiles across Shanghai, London, and New York have surpassed 1 million tons, marking the highest level recorded since 2003.

The LME cash contract trading at a $100 discount to the three-month contract indicates a lack of immediate tightness in the market. On the macroeconomic front, the minutes from the Federal Reserve indicated that policymakers are not in a rush to reduce interest rates, with some expressing willingness to consider additional hikes should inflation continue to be a concern. In January, China’s factory activity exhibited a deceleration, indicative of subdued domestic demand.

Nonetheless, the potential for downside seems restricted as markets incorporate expectations of sustained demand stemming from manufacturing, electrification, and artificial intelligence, in conjunction with limited mine supply. Output at significant Chilean mines experienced a decline, and similarly, Peru’s production also saw a year-on-year decrease. China intends to increase its strategic copper reserves, while Goldman Sachs identifies potential upward pressure on price forecasts for late 2026 should stockpiling efforts intensify.

Despite the global refined market being in surplus, the anticipation of structural demand growth is providing a degree of support. The market is currently experiencing short covering, evidenced by a 9.97% decline in open interest. Support is positioned at Rs 1,157.3 and Rs 1,146.4, whereas resistance is identified at Rs 1,176.8; a breach above this level may challenge Rs 1,185.4.