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Copper Slips on Profit Booking Amid Hopes for Chinese Stimulus

ByKedia Advisory
Published 30-09-2024, 10:42 am
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Copper prices settled down by -0.7% at 856.25 due to profit booking, following earlier gains driven by hopes of a rebound in China’s economy as officials pledged stimulus measures. China rolled out a significant stimulus package, including lowering interest rates, injecting liquidity into banks, and potentially issuing more than $280 billion in special sovereign bonds to boost economic growth. The premium for importing copper into China remained firm at $65 a ton, indicating robust demand from the world's largest consumer of copper.



However, China's industrial profits saw a sharp contraction in August, marking the biggest decline of the year, which highlighted the ongoing struggles in the economy. This poor data strengthened the case for further stimulus, potentially boosting metals prices shortly. Meanwhile, Europe's largest copper smelter, Aurubis, maintained its copper premium at $228 per ton for 2024 due to weak demand and subdued manufacturing activity in Europe. China’s refined copper exports dropped by 56% in August compared to the previous month, although they were still 50% higher than in August 2023. Refined copper production in China increased by 0.9% year-on-year to 1.12 million metric tons in August. Globally, the copper market showed a surplus of 95,000 metric tons in June, reflecting oversupply in the market.



From a technical perspective, the copper market witnessed long liquidation, with open interest decreasing by 6.38%. Prices found support at 852.5, and a break below this level could test 848.8. On the upside, resistance is now likely at 862.8, with a move above potentially testing 869.4.

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