Copper prices advanced 1.20% to settle at Rs 1,311.9, buoyed by improving demand signals from China, tightening global inventories, and ongoing supply concerns. Geopolitical tensions in the Middle East have positively influenced sentiment, as renewed attacks involving the United States and Iran have intensified concerns regarding potential disruptions to global trade via the Strait of Hormuz. The rally was further bolstered by a decrease in production in Chile, where water shortages, diminishing ore grades, maintenance issues, labour disputes, and the shift from oxide to sulphide mining persisted in impacting output. Supply fundamentals have shown resilience, with copper inventories in LME-approved warehouses declining over 20% since the end of May, reaching a four-month low of 305,200 tonnes. Furthermore, nearly 43% of warehouse warrants have been cancelled, suggesting that additional metal is set for delivery.

Chile’s leading producers experienced notable reductions in output during May, with Codelco reporting an 18.3% decrease year-on-year, Escondida seeing a 17.6% drop, and Collahuasi facing a 19.3% decline. Simultaneously, copper inventories at the Shanghai Futures Exchange decreased by 18.3% in the past week, underscoring a contraction in physical availability within China. Demand indicators continued to exhibit supportive trends. In April, China experienced a 3.2% year-on-year increase in unwrought copper imports, reaching a seven-month peak. This uptick occurred despite unprecedented levels of domestic refined copper production, indicating robust demand driven by investments in power infrastructure, which saw grid spending surge by 37% in the first quarter.

Meanwhile, the International Copper Study Group reported a global refined copper deficit of 145,000 tonnes in April as consumption exceeded production. Investment banks have adopted a more optimistic outlook, as evidenced by Goldman Sachs and Citi revising their copper price forecasts upward. This adjustment is attributed to anticipated tighter growth in mine supply and heightened expectations for global demand.

Technically, copper is experiencing new buying activity, as evidenced by a 1.5% increase in open interest in conjunction with rising prices. Immediate support is positioned at Rs 1,301.2, with subsequent support at Rs 1,290.6. Resistance is identified at Rs 1,321.2, and a sustained movement above this threshold may lead to further gains towards Rs 1,330.6, thereby maintaining a robust near-term technical outlook.