There are now signs of weaker global demand in copper markets, as China's economic recovery is slowing.
A sharp fall in copper prices shows a rapid growth of the metal inventories outside China at the London Metal Exchange (LME), as industrial activity in the U.S. and Europe begins to slow after a year of aggressive rate hikes.
According to base metals analyst at StoneX Natalie Scott-Gray, copper prices are starting to depend more on real signs of weaker demand, rather than such macroeconomic factors as the U.S. dollar and expectations about China.
As metals strategist at broker Marex Al Munro said, the current situation might have unprecedented consequences. Previously, a bullish scenario was fully based on expectations about China’s economic recovery. However, they were not met, and the West is facing a slowdown in economic growth, Munro added.
The copper price fell by 11% over the month and is trading below $8,000 per ton, hitting the lowest level since November.
In addition, the industrial metal suffered from the outlook on raising interest rates in the U.S.
The Federal Reserve’s aggressive campaign on monetary policy tightening also undermined copper demand. Investors awaited a pause, but the latest Fed comments signal further hikes.
Besides, according to the results of the Fastmarkets study, 12 new projects related to construction or expansion of copper plants are planned in China for 2026. There is a chance of a 3.4 million ton increase in copper production by Chinese companies in three years. This shows a potential rise in copper supply in the market.
According to the wave analysis, the copper price is in the formation of the fifth descending wave. The price broke through the 8,145 support level of the third wave. If this wave structure has a five-wave system, the current wave could stop its fall at the next strong support level of 7,855.
Signal:
The short-term outlook for copper suggests selling.
The target is at the level of 7,600.
Part of the profit should be taken near the level of 7,800.
The Stop-loss is at the level of 8,200.
Bearish trend is of medium-term nature, so it is worth selecting the trading volume of not more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
