Copper Eased As Inventories In SHFE Warehouses Rose 109.6%

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Copper Eased As Inventories In SHFE Warehouses Rose 109.6%

Copper prices faced a decline of -0.32%, settling at 730.9, driven by a significant increase in inventories in warehouses monitored by the Shanghai Futures Exchange. The latest data revealed a staggering 109.6% rise in copper inventories, reaching 181,323 tonnes by the week ending February 23rd. This level is more than double the pre-Lunar New Year figures and represents a nearly 500% increase year-to-date. The surge in inventories contributed to the continued decline of the Yangshan Copper Premium, reflecting challenges in the demand for base metals in China. The market is grappling with the repercussions of China's stimulus measures and looser monetary policies on base metal demand. 

This follows a broader pessimistic outlook for industrial demand in China, marked by four consecutive months of contractionary manufacturing PMI and a slowdown in property and financial momentum. The International Copper Study Group (ICSG) reported a surplus of 20,000 metric tons in the global refined copper market for December, a significant shift from the 123,000 metric tons deficit in November. For the first 12 months of the year, the market showed an 87,000 metric tons deficit compared to a 434,000 metric tons deficit in the same period the previous year. World refined copper output in December reached 2.39 million metric tons, while consumption stood at 2.37 million metric tons. 

Technically, the copper market witnessed fresh selling, with an 8.05% increase in open interest, settling at 4,107. The commodity is currently finding support at 728.1, with a potential test of 725.4. On the upside, resistance is likely at 733.4, and a breakthrough could lead to testing levels around 736.

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