Copper Gains As Global Refined Copper Market Showed A 30,000 Tonne Deficit In July

  • Commodities Analysis

Copper yesterday settled up by 1.27% at 652.35 as the global refined copper market showed a 30,000-tonne deficit in July, compared with a 105,000-tonne deficit in June, the International Copper Study Group (ICSG) said in its latest monthly bulletin. For the first 7 months of the year, the market was in a 126,000-tonne deficit compared with a 183,000-tonne deficit in the same period a year earlier, the ICSG said. Shrinking copper demand in Europe due to a manufacturing recession caused by the energy crisis will dominate market sentiment for some time with prices likely to retreat towards two-year lows early next year.

Copper prices typically react to the ebb and flow of demand in China, which accounts for half of the global consumption estimated at around 25 million tonnes this year. London Metal Exchange (LME) warehouses saw 11,200 tonnes of copper arrivals, the largest single-day warranting since June. Inflows have totaled over 35,000 tonnes this month but have been largely offset by departures. Headline stocks of 118,000 tonnes are up by only 3,625 tonnes at the end of August. LME Inventory remains ultra-low by any historical yardstick, representing just two days' worth of global usage. The LME premium for cash over three-month delivery spiked to $150 per tonne last week and is still trading around $55 despite Tuesday's hefty deliveries of copper onto warrant.

Technically market is under short covering as the market has witnessed a drop in open interest by -20.78% to settle at 3618 while prices are up 8.15 rupees, now Copper is getting support at 646.8 and below same could see a test of 641.1 levels. Resistance is now likely to be seen at 656.8, a move above could see prices testing 661.1.

Trading Ideas:
# Copper trading range for the day is 641.1-661.1.
# Copper gained as the global refined copper market showed a 30,000-tonne deficit in July
# Europe upstages China as the main driver for copper outlook
# China's 2023 GDP projection is reduced by Goldman Sachs (NYSE: GS ) to 4.5% from 5.3%.

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