Copper is declining together with all metals amid growing concerns about rising interest rates. The global economy is showing signs of weakness, and regulators are not ready to decrease interest rates for growth stimulation. Countries need to anchor increase in prices. Interest rates will remain high for a longer period of time than investors previously expected.
Despite the stable demand for oil in China, metals are less popular.
Copper prices in China fell due to increased imports and weak consumption. The supply of metal on the market was adequate. Refineries restock copper only as needed, and this situation is hardly expected to change in the short term due to high prices.
Production of green metals will rise as governments see a supply shortage. As a result, this will cause overproduction and will lead to a correction in metal prices. New investment in production is negative for metal prices.
Germany's government plans to create a state fund amounting up to 2 billion euros. These funds will be intended to support the production of raw materials that are critical to the country's transition to a green economy.
Important raw materials such as cobalt, lithium, copper, silicon and rare-earth metals are necessary for Germany's transition to a green economy. These metals and minerals have a wide range of applications, including wind turbines and batteries for electric vehicles. According to a study by the DIW Berlin analysis center, Germany is more than 90% dependent on imports of these critical commodities.
On technical analysis, copper is moving down from the wedge that has been forming during the last month. Also, there was a fixation of the price below the 0.236 Fibonacci level from the whole growth wave from lows.
The level of 0.382, which coincides with the local lows of April, could be a technical target for the decrease. This corresponds to a price of $8,560. Stop-loss can be set at the return to the wedge and the renewal of maximum prices in the last trading sessions at the level of $9050.
Decrease in the price of copper:
Take profit – 8560
Stop-loss – 9050