Copper Rose As Measures To Stimulate Construction And Industrial Activity

  • Commodities Analysis
  • Editors Pick

Copper yesterday settled up by 0.99% at 691.55 as measures to stimulate construction and industrial activity coincided with looming supply concerns. Authorities in top consumer China lifted a ban on equity refinancing for listed property developers, shortly after the country’s top banks extended $162 billion in fresh credit lines for the sector. Additionally, the PBoC cut its reserve ratio by 25bps after rapidly increasing covid cases in the country drove the government to trigger strict lockdowns and business curbs. Concerns of upcoming shortages also supported copper futures hovering nearly 15% above the 20-month low of $3.2 in July. Commodity trader Trafigura warned that global copper stocks have fallen to record lows, with current inventories enough to supply world consumption for just 4.9 days.

Freeport-McMoran was also vocal about shortage risks, stating that low prices do not reflect the tightness of the physical market. Copper output in Chile, the world's largest producer of the metal, rose 2.2% year-on-year to 485,447 tonnes in October, the country's statistics agency INE said. The world's refined copper market showed a 10,000-tonne deficit in September, compared with 13,000 tonnes in August, the International Copper Study Group (ICSG) said in its latest monthly bulletin. World refined copper output in September was 2.16 million tonnes, while consumption was 2.17 million tonnes.

Technically market is under short covering as the market has witnessed a drop in open interest by -0.29% to settle at 5215 while prices are up 6.75 rupees, now Copper is getting support at 686.5 and below same could see a test of 681.4 levels, and resistance is now likely to be seen at 694.8, a move above could see prices testing 698.

Trading Ideas:
# Copper trading range for the day is 681.4-698.
# Copper rose as measures to stimulate construction and industrial activity coincided with looming supply concerns.
# PBoC cut its reserve ratio by 25bps after rapidly increasing covid cases drove the government to trigger strict lockdowns and business curbs.
# Chile copper output up 2.2% in October; industrial output drops 9.2%.

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