Yesterday copper was among the leaders of the fall. The metal as an indicator of the economy’s health declined sharply amid renewed concerns about the banking sector problems and the prospects for the global economy. However, these fears echoed the previous struggles, so the metal might quickly recover. Other risk assets are already showing positive dynamics today.
Chinese copper market participants are worried about a large inflow of imported metal. However, more traders will make deliveries under long-term contracts towards the end of the month. The number of small orders is likely to decline.
Copper demand from Chinese refiners might increase in the next few days due to lower metal prices and the upcoming Labor Day holiday. Domestic demand for copper in China remains weak, and the market is concerned about the state of the U.S. economy.
The current relatively low prices might increase demand for the metal, thereby supporting the prices.
Comments from the participants of the event conducted by the Chilean Center for Copper and Mining Studies (CESCO) indicate a lot of interest in the production of the red metal. There have already been several deals on buying copper companies, e.g., BHP acquired Oz Minerals and Hudbay Mineral acquired Copper Mountain.
Such an interest in the red metal is understandable. The sector has emphasized the importance of copper in the energy transition and production of electric vehicles for several years.
The sector's consolidation means that it is easier for companies to acquire some businesses than to develop their own fields. Therefore, supply will be under pressure, while demand will grow. In the long term, copper prices will rise.
According to the technical analysis, copper has reached the local lows. A reversal and growth to the nearest resistance level is likely to follow now. Some commodities and stock markets have already shown a rebound.
The growth target will be the level of $8,678. It is the resistance, which used to be the support for the price. A Stop-loss will be set at the update of yesterday's lows, which corresponds to the price of $8,490.
Copper prices are likely to rise:
Take profit – 8,678
Stop-loss – 8,490
This content is for informational purposes only and is not intended to be investing advice.
