Copper settled lower by 0.27% at Rs 1,378.55 as a stronger US dollar, bolstered by better-than-expected employment data, heightened expectations of tighter monetary policy, and concerns over demand exerted downward pressure on prices. US nonfarm payrolls increased by 162,000 in August, following a revised rise of 23,000 in July, markedly surpassing projections of a 56,000 gain. However, copper fundamentals exhibited a mixed outlook, characterised by indications of tightening supply in certain key markets. US refined copper and alloy imports hit a historic high of 225,094 metric tonnes in July, as traders persistently accumulated inventories in anticipation of possible US copper tariffs.

COMEX copper inventories have risen for 53 consecutive days, reaching a record 764,597 short tonnes, as uncertainty surrounding the proposed tariff continues to impact global trade flows. Shanghai Futures Exchange copper inventories decreased by 13% week-on-week, reaching 63,000 tonnes, the lowest level observed since January 2024. Concurrently, LME stocks experienced a reduction of 475 tonnes, with an additional 1,550 tonnes designated for withdrawal. The copper forward curve continued to exhibit backwardation, suggesting a short-term tightness in supply.

However, the cash-to-three-month premium experienced a significant contraction, decreasing to $93 per tonne from over $500 on August 17. Supply concerns were underscored by a 9.4% year-on-year decline in Chilean copper production in July, which fell to 403,424 tonnes as a result of adverse weather conditions and maintenance activities at major mines. The global refined copper market experienced a deficit of 60,000 tonnes in June, a notable shift from the 15,000-ton surplus recorded in May. However, the surplus for the first half of the year expanded to 131,000 tonnes. Chinese copper imports exhibited a decline, as unwrought copper and copper product imports decreased by 11.5% year-on-year in July.

Technically, the market is experiencing new selling pressure as open interest rose by 0.94% to 10,772 contracts, while prices fell by Rs 3.75, suggesting the establishment of new short positions. Copper has established support at Rs 1,373.8, and a decline beneath this threshold may lead to a test of Rs 1,369.0. On the upside, resistance is positioned at Rs 1,383.6, and a sustained movement above this threshold may result in a test of Rs 1,388.6.