Copper holds up better than other metals for a reason

All commodities this week have felt the pressure from the rising dollar. However, among the industrial metals, copper quotations hold up better than others. The losses are limited by the support range of 8800-8850, from which a rebound upwards follows very quickly. And from a fundamental point of view, such resistance seems quite reasonable.

Problems with copper production have been affecting the leading producers of the metal (Chile and Peru) for several months, and are gradually spreading to other countries. It has become known that First Quantum Minerals Ltd. may completely stop its operations in Panama in the next few days if the government of that country will not agree to resume copper exports.

The mining company and Panamanian authorities have a long-term dispute regarding the amount of taxes to be paid. At the moment, the First Quantum department in Panama has already stopped hiring employees, which shows the importance of the situation. This mine is the largest in Central America, last year it produced 351,000 tons of copper.

Another of the world's leading copper producers, Freeport-McMoRan, is forced to stop production at its Grasberg mine in New Guinea until at least the end of February due to landslides and floods. The company has already said that it will be reviewing a plan for production of copper and other metals in 2023. The January forecast for this year's production was 5,000 ounces of gold and 272,500 tons of copper, but the figures will be reconsidered downward in the future.

As it was mentioned above, the range of 8800-8850 looks interesting for opening long positions in copper. Here quotations can reverse and move to the levels of 9000 and 9050, where the profit should be fixed, because the optimistic mood on the financial markets is not stable right now.

The following trading strategy option can be suggested:

Buy copper at its decrease in the range of 8800-8850. Take profit 1 – 9000. Take profit 2 – 9050. Stop loss – 8700.

Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.