Copper settled 0.99% lower at Rs 1,405.25, influenced by weak economic data from China, rising oil prices, and a stronger US dollar, which collectively dampened demand prospects. China’s industrial profit growth experienced a further deceleration in August, as advancements in technology manufacturing associated with the AI boom were counterbalanced by ongoing weak domestic demand. Increased Treasury yields, coupled with anticipations of additional Federal Reserve tightening measures aimed at curbing inflation, exerted downward pressure on copper prices. Meanwhile, indicators of copper supply exhibited a mixed performance.
Warehouse inventories at the Shanghai Futures Exchange decreased by 15.9% compared to the prior week, reaching 47,147 tonnes. Concurrently, the cash-to-three-month spread on the LME expanded into a backwardation of $124.75 per tonne, up from $68.93, suggesting a tightening in immediate supply availability. Chilean copper production experienced a decline of 9.4% year-on-year in July. Codelco’s output decreased by 5%, totalling 112,800 tonnes, while Escondida saw a more significant drop of 22.1%, producing 89,400 tonnes. However, it is noteworthy that operations at Escondida are currently being progressively resumed. Collahuasi’s production experienced a notable increase of 12.3%, reaching a total of 38,400 tonnes.
Peru’s copper output experienced a year-on-year increase of 3.7%, reaching 236,515 tonnes in July. Furthermore, production from January to July saw a rise of 2.2%, totalling 1.6 million tonnes. The ICSG reported a global refined copper deficit of 51,000 tonnes in July, a reduction from 74,000 tonnes in June, while the market from January to July continued to exhibit a surplus of 32,000 tonnes. 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 experienced a year-on-year decline of 6.7%, totalling 3.30 million tonnes.
Technically, copper is experiencing renewed selling pressure, as evidenced by a 2.95% increase in open interest to 9,066, alongside a price decline of Rs 14. This suggests heightened participation amid the downward movement. The market is discovering support around Rs 1,394, and a persistent breach beneath this level may reveal Rs 1,382.6. On the upside, resistance is positioned around Rs 1,416.9, and a decisive movement above this threshold could initiate a recovery toward Rs 1,428.4.
