Copper settled 0.64% higher at Rs 1,374.35, buoyed by indications of robust demand from China, the leading global consumer. However, traders exhibited caution in anticipation of the US Federal Reserve’s interest-rate decision. Chinese buyers have capitalised on the recent price decline to restock inventories, resulting in a 7% increase in the Yangshan copper premium to $118 per tonne, marking its highest level in nearly four years. Inflows into US COMEX copper stocks have decelerated amid ongoing uncertainty regarding potential tariffs on refined copper, while the premium of COMEX over London prices has experienced a significant decline.

The tightness in the LME copper market has diminished, as spreads have transitioned into contango. However, this shift seems to be largely influenced by sentiment, amidst ongoing uncertainty regarding US tariff policy. China’s imports of unwrought copper and copper products decreased to 382,000 tonnes in August, down from 425,000 tonnes in July. For the period from January to August, imports fell by 6.7% year-on-year, totalling 3.30 million tonnes. Copper concentrate imports decreased to 19.49 million tonnes in the first eight months, down from 20.06 million tonnes in the same period last year.

Supply concerns persist, as evidenced by a 9.4% year-on-year decline in Chilean copper production in July, which totalled 403,424 tonnes, attributed to severe weather conditions and operational disruptions. Codelco output declined 5% to 112,800 tonnes, while Escondida production dropped 22.1% to 89,400 tonnes; however, Collahuasi output increased 12.3% to 38,400 tonnes. The International Copper Study Group reported a refined copper deficit of 60,000 tonnes in June, contrasting with a surplus of 15,000 tonnes in May. Nevertheless, the market maintained a surplus of 131,000 tonnes during the first half of the year.

Global refined copper production totalled 2.37 million tonnes in June, while consumption stood at 2.43 million tonnes. Technically, the market is experiencing short covering, evidenced by a 4.76% decline in open interest to 8,936, while prices increased by Rs 8.8. Copper is currently finding support at Rs 1,369.4. A breach of this level may lead to a test of Rs 1,364.4. Conversely, resistance is established at Rs 1,377.9, and surpassing this threshold could see prices approach Rs 1,381.4.