Copper continues to trade in a wide sideways, which began to form since January this year. During this time, the economy has improved: inflation has fallen, China is showing a strong recovery, and the reversal of central bank monetary policy is getting closer.
Copper reserves continue to decrease.
The current situation with copper reserves on the London Metal Exchange (LME) indicates that it will reach its lows for the last 18 years soon. This may lead to a new wave of increase in metal prices.
Since 2020, LME copper reserves have fallen more than 78% from 250,000 tons to only 54,000 tons in April 2023. On the other hand, the price of the metal soared by 80% during this period and now it is near the level of 9,000 dollars per ton.
The problem is in the limited supply of metal. Most of the demand for copper comes from China, which is recovering from the cancellation of the Covid-zero policy.
Aurubis AG, Europe's largest copper producer, has stopped buying the metal from Russia after its supply contracts expired. Company CEO Roland Haringes announced this at the World Copper Conference in Santiago.
Aurubis does not produce, but refines and processes the metal into wire and other components.
Now, according to Haringes, buyers have refocused on other sources of the metal, and there are no problems with supplies.
Restrictions implemented by consumers of copper also have a positive effect on the price of copper. Because problems in the supply chain make it necessary to put a higher price tag.
Based on the technical analysis, the price of copper on the hour timeframe went up from the correctional channel. The uptrend, which began in early April, provides support for the metal from the bottom. Long positions in copper should be opened from the current price. The growth target will be at the level of local highs at $9170. Stop-loss can be set when it goes below the support line, which corresponds to the price of $8,900.
Rise in the price for copper:
Take profit – 9170
Stop-loss – 8900
This content is for informational purposes only and is not intended to be investing advice.
