Copper prices rose by 0.62% yesterday, closing at 856.6, driven by production delays at Freeport-McMoRan’s Manyar smelter in Indonesia. The smelter, expected to begin output in September, will now see its first production in November due to water and steam leakage issues during testing. This delay has created uncertainty in the supply chain, adding upward pressure on prices. Additionally, copper inventories monitored by the Shanghai Futures Exchange (SHFE) increased to 141,625 metric tons, reflecting ample supply. However, demand from China, the world’s top consumer, remains solid with a firm premium of $65 per ton for copper imports.
On the macroeconomic front, China’s central bank is taking steps to support the struggling property market by advising banks to lower mortgage rates before October 31, potentially boosting demand for industrial metals like copper. However, global copper markets continue to show a surplus, with the International Copper Study Group (ICSG) reporting a 91,000 metric tons surplus in July, down from 113,000 metric tons in June. For the first seven months of 2024, the market recorded a surplus of 527,000 metric tons, significantly higher than the same period last year. China's unwrought copper imports fell to a 16-month low in August, totalling 415,000 tons, down 12.3% year-on-year, signalling weaker demand. However, copper concentrate imports increased by 3.2% for the first eight months of the year.
Technically, the market is experiencing fresh buying with a 1.89% rise in open interest, settling at 8,442 contracts, while prices increased by 5.25. Copper has support at 849.6, with a potential test of 842.4. Resistance is seen at 863.1, and a break above could push prices to 869.4.