Copper gains as Shanghai warehouse copper stocks down 13.4%

Copper yesterday settled up by 0.79% at 724.15 as Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 13.4% from last Friday. Industrial production in the world’s top copper consumer rose by 5.6% annually in April, well below market expectations of a 10.9% jump, while property investment tanked by 16.2% and new home construction continued to decline. The global copper market is expected to see a deficit this year, steered by improved Chinese demand, the International Copper Study Group (ICSG) said.

The ICSG forecast a deficit of about 114,000 tonnes for 2023 compared with a surplus of about 155,000 tonnes expected last October, mainly due to better expectations for Chinese usage. However, "a surplus of about 298,000 tonnes is expected in 2024 as a consequence of additional supply." "The reopening of China after the zero-Covid policy, a recovery in the rest of the world from constrained demand in 2022 and improved economic growth in 2024 are all expected to support usage growth in 2023 and 2024," the organisation said. Copper inventories at the Shanghai Futures Exchange fell to under 135 thousand tonnes, the lowest this year, and those at the London Metal Exchange were under 60 thousand tonnes, the lowest since 2005.

Technically market is under short covering as the market has witnessed a drop in open interest by -20.4% to settle at 3091 while prices are up 5.65 rupees, now Copper is getting support at 720 and below the same and could see a test of 715.8 levels, and resistance is now likely to be seen at 728.2, a move above could see prices testing 732.2.