Copper settled lower by -0.45% at 718.3 due to several factors. A stronger US dollar , elevated inventories, and reduced risk appetite following the Federal Reserve's indication of prolonged restrictive policy all weighed on copper prices. Copper inventories in Shanghai Futures Exchange warehouses declined by 16.9% in a week, signalling some supply tightening. However, inventories in LME-registered warehouses remained high, with data from the ICSG showing a surplus in the copper market from January to July.
The discount for near-term copper delivery compared to the LME three-month contract reached a four-month high, indicating ample immediate supply. Southern Copper, a significant copper producer in Peru, expects a 17% increase in its copper production this year, reaching 400,000 metric tons. This growth is driven by improved operations following disruptions from community protests last year. In terms of market balance, the global refined copper market showed a 19,000 metric ton deficit in July, a decrease from the 72,000 metric ton deficit in June, as reported by the International Copper Study Group (ICSG).
Technically, the market experienced fresh selling, with a notable 12.43% increase in open interest, settling at 6,640 contracts. Copper found support at 716.1, with potential testing of 713.9 levels, while resistance was observed at 722.2, and a move above could lead to testing 726.1 levels.
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