Copper settled 0.85% lower at Rs. 1,407.45 as a stronger United States dollar and rising oil prices weighed on sentiment. However, renewed buying interest from China limited further losses. Expectations of restocking following China’s week-long holiday bolstered the market, as the Yangshan copper import premium increased by 5% from its prior assessment to $125 per tonne, marking the highest level since November 2022. Supply concerns persisted as workers at Chile’s Centinela copper mine remained on strike, while BHP sought government mediation to avert a potential strike at Escondida, the world’s largest copper mine.
Chilean copper production experienced a year-on-year decline of 12.8% in August, attributed to disruptions caused by storms and a decrease in ore grades. On the London Metal Exchange, copper inventories continued to exhibit tightness, influenced by 3,325 tonnes of cancelled warehouse orders. The cash contract premium over the three-month forward contract has risen to $120 per tonne from around $89, indicating a tightening of nearby supply. Bank of America has adjusted its long-term forecast for copper prices upward, attributing this revision to limited supply outside the United States and ongoing tight conditions in China. However, it noted that high oil prices and geopolitical tensions continue to pose challenges in the near term.
Meanwhile, COMEX copper speculators decreased their net long positions by 3,940 contracts, bringing the total to 78,709 for the week ending September 29. The International Copper Study Group reported a refined copper market deficit of 51,000 tonnes in July, narrowing from 74,000 tonnes in June. However, the market registered a cumulative surplus of 32,000 tonnes during the first seven months, in contrast to 157,000 tonnes in the same period the previous year. In July, refined copper production amounted to 2.41 million tonnes, while consumption was recorded at 2.46 million 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 long liquidation, as prices have decreased by Rs. 12, accompanied by a 4.31% reduction in open interest to 8,051 contracts. Support is positioned at Rs. 1,397.60, with an additional level at Rs. 1,387.80, whereas resistance is identified at Rs. 1,425.10. A sustained move above this level could push prices toward Rs. 1,442.80.
