Copper Settled Flat Due To A Strong Dollar And Muted Demand.

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Copper Settled Flat Due To A Strong Dollar And Muted Demand.
Credit: © Reuters.

Copper prices eked out a marginal gain of 0.01%, settling at 713.35, amidst persistent dollar strength and subdued demand. The Federal Reserve's resistance to market expectations of multiple rate cuts in the face of ongoing inflationary pressures contributed to a stronger US dollar , impacting copper benchmarks priced in the currency and squeezing the purchasing power of importers. China, a major player in the copper market, saw slower-than-expected growth figures, further dampening the outlook as the country refrains from implementing additional stimulus measures. 

This caution was evident in the People's Bank of China's unexpected decision to maintain its medium-term facility rates. Additionally, copper stocks at major Chinese warehouses surged by nearly 40% since the beginning of the year, reflecting hesitancy among manufacturers to place significant bids and a plunge in Yangshan copper premiums. Challenges in copper production were also noted in Chile, a key copper-producing region. The Chilean Copper Commission (Cochilco) reported a slowdown in copper production growth for the decade, citing delays in projects under construction. Despite this, Antofagasta (LON: ANTO ) reported a 2% increase in copper production for 2023, reaching 660,600 metric tons. 

Technically, the copper market is undergoing short covering, marked by a 5.19% drop in open interest, settling at 4821. Prices inched up by 0.05 rupees, with support at 710.7. A breach below this level could lead to a test of 707.9, while resistance is anticipated at 716.1, and a move above may see prices testing 718.7.

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