MCX Copper Analysis: Below 778 Target Price 754—738—725 (Need Patience)

MCX Copper Analysis: Copper prices fell on Monday from their highest levels in nearly seven months, as subdued physical demand and a global economic downtrend weighed on prices.

Three-month copper on the London Metal Exchange dipped 0.1% to $9,173.50 a tonne by 0712 GMT, having hit its highest since June 16, 2022 of $9,257 a tonne in the previous session.

Copper Price Analysis

Copper prices stared to provide negative fluctuation within the bullish track, affected by stochastic exit from the overbought areas, to settle near 4.1100 level, and in case the price faced more negative pressures, that will force it to suffer more losses, to expect targeting the additional support at 4.0200 followed by renewing the bullish attempts in order to achieve more gains by targeting 4.3000 mainly.

The expected trading range for today is between 4.0000 and 4.2000

China’s factory activity in December shrank at the sharpest pace in nearly three years as COVID-19 infections swept through production lines across the country.

Yangshan copper premium was at $32.50 a tonne on Friday, down from $152.50 last October.

  • Copper prices managed to break prior highs after experiencing several weeks of pullback.
  • Now major cities in China near and pass their COVID peaks, copper prices again appear decidedly bullish.
  • A falling U.S. dollar has added further support to the copper market.

Copper Supply and Demand

Supply disruption in Peru helped limit the price drop, while the dollar hit a seven-month low and low copper inventories in the LME and SHFE warehouses – at 186,343 tonnes combined on Friday, or just over two days worth of global consumption.

Also in Peru, tin miner Minsur said it was temporarily suspending operations at its San Rafael mine.

Copper Market: Future Issues Waiting for China

When China finally does find itself on the other side of the pandemic, many other problems await. For one, the construction sector remains weak amid the ongoing property crisis. Of course, China has made continued efforts to support the sector. The most recent was a move away from the “three red lines” policy. This shift helped ease debt constraints on developers, but the industry remains in decline. Q4 of 2022 marked the sixth consecutive quarter of year-over-year declines in housing sales.

According to the China Construction Machinery Association, excavator sales in China, a proxy for construction activity, saw a 23.8% decline. China’s aging population will add yet another layer of difficulty to the recovery as many wonder who else is left to build for in the future? The construction industry has historically served as one of the largest consumers of China’s overall copper demand. Should declines continue and demand see limited recovery, it could trigger a strong pullback in the country’s copper market.

MCX Copper Analysis
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