Copper prices decreased by 1.06% to close at Rs 1,313.55, influenced by escalating geopolitical tensions in the Middle East and increasing expectations of tighter monetary policy, which negatively impacted sentiment across industrial metals. The United States initiated military action against Iranian targets in response to the downing of an American helicopter. This escalation has heightened apprehensions regarding inflation, rising energy prices, and the likelihood of additional interest rate increases, which may impede global economic growth and dampen industrial demand. Despite the recent price weakness, the underlying supply fundamentals continue to exhibit support. LME copper inventories decreased by 3,075 tonnes, reaching 369,975 tonnes, marking the lowest level since early April.

Concurrently, warrant cancellations in Singapore have driven unavailable stocks to nearly 38% of total inventories, the highest proportion observed since December. Last week, copper inventories at the Shanghai Futures Exchange experienced a decline of nearly 4%, indicating a tightening in physical availability. In China, the central bank has urged banks to enhance lending, bolstering initiatives aimed at sustaining economic activity and metal demand. In April, Chinese unwrought copper imports experienced a year-on-year increase of 3.2%, reaching a seven-month peak of 452,000 metric tonnes. This rise can be attributed primarily to robust investment in power grid infrastructure, which saw a 37% uptick in spending during the first quarter.

Supply concerns continue to be a significant issue, driven by the deceleration of mine growth in crucial producing areas. Production challenges at Indonesia’s Grasberg mine and the Kamoa-Kakula operation in the Democratic Republic of Congo persist, constraining supply growth, while copper output in Chile has also shown signs of weakness. Major institutions, including Goldman Sachs and Citi, have elevated their medium-term forecasts for copper prices, attributing this adjustment to increasingly constrained global supply conditions and heightened expectations for demand.

Technically, the market is experiencing long liquidation, as open interest has decreased by 2.54% to 15,419 lots, coinciding with a decline in prices. Immediate support is identified at Rs 1,305.3, with subsequent support at Rs 1,297.0. Resistance is positioned at Rs 1,324.7, and a sustained movement above this threshold may lead to further gains towards Rs 1,335.8.