Copper Down After Data Showed That Copper Stocks In Shanghai Bonded Area Rose

  • Commodities Analysis

Copper yesterday settled down by -0.38% at 754.1 after data showed that copper stocks in Shanghai bonded area rose 7,000 mt from the prior week to 396,700 mt as of Friday, April 30. However, downside seen limited amid strong U.S. economic data and the Federal Reserve's commitment to continue supporting the economy fuelled investors' appetite for risk.
 
Factory activity in top metals consumer China expanded at a slower-than-expected pace in April as supply and transport bottlenecks weighed on production and overseas demand lost momentum. Copper's rally, driven by a combination of optimism about recovery prospects for the pandemic-hit global economy and supply concerns, is likely to stall in the second half of 2021 as China reins in stimulus spending.
 
Goldman Sachs (NYSE: GS ) forecast copper would average $9,675 a tonne in 2021, $11,875 a tonne in 2022 and $12,000 a tonne in 2023. However, Yangshan copper premium fell to $43 a tonne, its lowest since April 2017, indicating weakening demand from top consumer China as prices have leapt 24% this year. The global world refined copper market showed a 28,000 tonnes surplus in January, compared with a 1,000 tonnes deficit in December, the International Copper Study Group (ICSG) said in its latest monthly bulletin.
  
Technically market is under long liquidation as the market has witnessed a drop in open interest by -2.77% to settled at 3582 while prices down -2.85 rupees, now Copper is getting support at 749.3 and below same could see a test of 744.4 levels, and resistance is now likely to be seen at 761.6, a move above could see prices testing 769.

Trading Ideas:
# Copper trading range for the day is 744.4-769.
# Copper prices dropped paring gains after data showed that copper stocks in Shanghai bonded area rose 7,000 mt from the prior week to 396,700
# However downside seen limited amid strong U.S. economic data and Fed’s commitment to continue supporting the economy fuelled investors' appetite for risk.
# Goldman Sachs forecast copper would average $9,675 a tonne in 2021, $11,875 a tonne in 2022 and $12,000 a tonne in 2023.

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