Copper prices declined by 0.57%, settling at 801.4, pressured by rising inventories, tepid demand from China, and a stronger dollar. Copper inventories in LME-registered warehouses surged by 8,700 tons to 322,950 tons, marking the highest level in about five years and double the levels seen in mid-June. This increase in inventories has been driven by substantial exports from China, contributing to the bearish sentiment in the copper market.
BHP Group, a major copper miner, downgraded its forecast for China's copper demand growth to 1-2% for this year, citing an expected sharp contraction in housing completions. While BHP maintains that copper will face severe shortages and much higher prices in the long term due to the energy transition, the near-term outlook remains cautious. The company anticipates a modest global surplus in copper through the end of 2025, despite predicting a “fly-up pricing regime” later this decade due to a prolonged worldwide deficit. Chinese exports of refined copper have also weighed on the market, with the country exporting an unprecedented 158,000 metric tons in June. Although China's copper demand has not collapsed, the export surge has deflated bullish sentiments, leading to a 16% decline in prices from the record highs seen in May.
From a technical perspective, the copper market is under fresh selling pressure, with open interest rising by 2.95% to 11,080 contracts. The market is currently supported at 798.1, with a break below this level potentially leading to a test of 794.8. On the upside, resistance is expected at 804.8, with a move above this level possibly pushing prices towards 808.2.