Copper prices moved up from their sideways movement, which we wrote about in the previous forecast. Like other commodities, copper outperformed the market yesterday. The upward move opens up new growth targets for the red metal.
Last year, the energy transition to greener energy sources slowed down. As the energy crisis is now receding, countries and companies are resuming green energy policies. Copper is one of the most in-demand metals for the energy transition.
In 2022, copper demand was under pressure amid political tensions, economic downturn in the U.S. and Europe, and China's tough zero-COVID policy. Copper is now trading at around $9,100 per ton, after the price decline by more than 20% from its peak of March 2022. Demand for the red metal will exceed supply in the medium term. Goldman Sachs analysts expect the price of copper to reach $11,000 per ton by the end of 2023.
China's economic activity accelerated in February as many residents returned to work after long Lunar New Year holidays. China's recovery after COVID-19 is driven by such sectors as retail and services, while the industrial sector remains depressed. According to data from the Iron and Steel Association, steel output hasn't changed this year, while inventories have risen. However, demand for some other commodities, such as oil and copper, is starting to rise.
Copper is one of those commodities that are in growing demand in China right now.
According to the technical analysis, the copper price stopped moving sideways and went higher, so there is room for growth in the size of this rectangle. There is a flat a little above this target, which was formed when the copper price updated its local highs at the beginning of this year.
The target of copper price growth will be the average of the two targets, which is the level of about $9360. Stop-loss will be placed at a return into the rectangle at the level of $9020.
A rise in the price of copper:
Take profit – 9360
Stop-loss – 9020
This content is for informational purposes only and is not intended to be investing advice.