Copper prices declined by 0.13% to close at Rs 1,275.3, influenced by signs of an increasing global surplus and prevailing macroeconomic challenges. The appreciation of the dollar, apprehensions regarding global economic expansion, and ongoing geopolitical instability in the Middle East have negatively impacted sentiment, especially in light of weaker demand indicators from China. Data from the International Copper Study Group indicated a notable surplus of 276,000 metric tons in February, a substantial increase from the 34,000 tons recorded in January, underscoring the imbalance in the refined market. At a fundamental level, the dynamics of supply and demand exhibit a mixed outlook.

In February, global refined copper production reached 2.26 million tons, while consumption was recorded at 1.98 million tons. The near-term support for prices can be attributed to a tightening supply landscape, driven by smelter maintenance activities and a decline in exchange inventories. Stocks on the Shanghai Futures Exchange fell by 16.3%, indicative of enhanced domestic consumption, bolstered by restocking in anticipation of China’s Labor Day holidays. Chinese imports experienced a decline of 10.9% year-on-year in March, reflecting a downturn in external demand, despite a domestic refined production increase of 8.7%, reaching 1.33 million tons. On the supply side, global mine production trends exhibited variability.

Peru experienced a 2.9% increase in output, contrasting with a 9.8% decrease reported by Chile’s Codelco, and a 7.4% reduction in production at significant mines such as Escondida. In contrast, Collahuasi experienced a significant increase of 56.5%. In the interim, Comex inventories have reached an unprecedented level of 603,745 short tons, indicative of inflows into the U.S. market driven by arbitrage opportunities. In the future, ICSG forecasts that the copper market will transition to a surplus of 96,000 tons by 2026, driven by a deceleration in demand growth and an increase in secondary supply.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a 1% decrease in open interest, bringing it down to 12,018. Copper exhibits immediate support at Rs 1,268.7, with potential further decline toward Rs 1,262.1. Resistance is identified at Rs 1,283.7, and a breach above this threshold may propel prices toward Rs 1,292.1.