Copper settled 1.91% lower at Rs. 1,365.40, as a decline in risk appetite, driven by renewed concerns over artificial intelligence spending and uncertainty surrounding tensions in the Middle East, exerted downward pressure on industrial metals. Sentiment was further influenced by China’s decision to increase the foreign exchange reserve requirement ratio for financial institutions by 2 percentage points to 6% from 4%, effective November 15. This move is aimed at tightening dollar liquidity and moderating the recent appreciation of the yuan.
However, underlying physical market indicators remained supportive, with the Yangshan copper premium holding near $200 per tonne, its highest level in more than a decade, while inventories in Shanghai Futures Exchange monitored warehouses declined by more than 75% over the past six months. Supply concerns have escalated following Cochilco’s significant downward revision of its 2026 copper production forecast, which has been cut by 8.4% to 4.94 million tonnes from a prior estimate of 5.27 million tonnes. The commission anticipates a modest recovery of 3% in 2027. Cochilco has adjusted its average copper price forecasts upward to $6.18 per pound for 2026 and $5.95 per pound for 2027, attributing this revision to restricted mine supply and a limited ability to accommodate production disruptions.
Meanwhile, the International Copper Study Group reported a refined copper surplus of 132,000 tonnes in August, contrasting with a deficit of 45,000 tonnes in July, resulting in a cumulative surplus of 218,000 tonnes over the first eight months. The ICSG anticipates an expansion of the global refined copper surplus, projecting an increase from 104,000 tonnes in 2026 to 368,000 tonnes in 2027. This growth is underpinned by elevated refinery output, even as demand persists from sectors such as electrification, renewable energy, digitalisation, and data centers. China’s copper imports rose by 20.7% month-on-month to 461,000 tonnes in September, indicating a robust demand for imports.
Technically, the market is experiencing long unwinding, evidenced by a 2.14% decline in open interest to 6,389 contracts, alongside a price decrease of Rs. 26.55, which suggests the liquidation of existing long positions. Copper is presently encountering support at Rs. 1,346.50, beneath which prices may challenge Rs. 1,327.00. On the upside, resistance is positioned at Rs. 1,384.50, and a sustained movement above this threshold could facilitate a recovery toward Rs. 1,403.00.
