Copper prices experienced a decline of 2.92%, settling at Rs 1,336.15. This drop reflects a weakening risk sentiment in the industrial metals sector, driven by renewed concerns about inflation and diminishing optimism regarding a potential peace agreement between the US and Iran. The decline was also reflected in physical market indicators, with the Yangshan copper premium decreasing by 9% to a five-week low of $64 per tonne, indicating weaker import demand in China. Despite the price correction, supply conditions continue to exhibit relative tightness. The premium of COMEX copper over the LME benchmark is consistently drawing metal into US warehouses, resulting in COMEX inventories reaching a record 583,055 tonnes and diminishing availability in other regions.

LME available inventories decreased to 240,050 tonnes, marking the lowest level since late February. Meanwhile, cancelled warrants represented 37% of total stocks, suggesting sustained demand for physical metal. Fundamental support for copper is closely tied to developments in China, where government officials have directed banks to enhance lending to boost economic activity. China’s copper demand remains robust, driven by significant investments in power infrastructure, as evidenced by a notable increase in grid spending during the first quarter. In April, imports of unwrought copper experienced a year-on-year increase of 3.2%, reaching a seven-month peak, even in the face of record domestic production of refined copper. Shanghai Futures Exchange copper inventories experienced a 4% decrease this week, marking their lowest level since December.

On the supply side, there are ongoing concerns regarding potential production disruptions in key mining regions. Chilean output has experienced a decline, and the recovery at Indonesia’s Grasberg mine is progressing at a slower pace than anticipated. Despite the International Copper Study Group’s forecast of a refined copper surplus in 2026 and 2027, numerous investment banks maintain an optimistic outlook, citing limited mine supply and robust long-term demand growth. Goldman Sachs and Citi have both adjusted their copper price forecasts upward, pointing to a reduction in global availability and sustained demand driven by infrastructure projects.

Currently, the market is experiencing long liquidation, with open interest decreasing by 2.28% to 16,896 contracts as prices have trended downward. Copper is currently positioned with immediate support at Rs 1,320.7, indicating a potential for further decline towards Rs 1,305.2. Resistance is identified at Rs 1,362, and a breakthrough above this threshold may lead to further increases towards Rs 1,387.8.