Copper losses due to supply outpacing demand and a gloomy demand outlook.

Copper yesterday settled down by -2.43% at 698.35 due to supply outpacing demand and a gloomy demand outlook. Demand for the metal has been affected by the lackluster economic recovery, particularly in China. Unlike in previous slowdowns, the Chinese government has not implemented substantial infrastructure or property spending, depriving copper and other metals of a safety net. Moreover, copper inventories in the London Metal Exchange nearly doubled since mid-April, indicating weakness in demand on a global scale.

This increase in supply relative to demand is evident in the wide contango spread between copper's spot price and three-month futures on the LME, the widest since 1994. The global refined copper market saw a 332,000-tonne surplus in the first quarter, compared with an 8,000-tonne surplus in the corresponding period last year, the International Copper Study Group (ICSG) said in its latest monthly bulletin on Tuesday. World refined copper output rose 7.5% in the quarter to 6.69 million tonnes while usage was estimated 2.3% higher at 6.35 million tonnes, the ICSG said. Preliminary official Chinese data showed refined production rose 13.5% and apparent demand in China grew by 5.5% in the first quarter, while refined usage in the rest of the world declined by 2%, the ICSG added.

Technically market is under fresh selling as the market has witnessed a gain in open interest by 29.99% to settle at 6779 while prices are down -17.4 rupees, now Copper is getting support at 693.6 and below same could see a test of 688.8 levels, and resistance is now likely to be seen at 707.6, a move above could see prices testing 716.8.