Copper prices rose on investors’ optimism about China's economic recovery, while higher supplies and demand worries weighed on the market.
Data released last week about a third monthly contraction of China's factory activity strengthened hopes for fresh stimulus.
Analysts warned the near-term demand outlook for copper used in power, construction and transportation sectors remained subdued amid a decline in some copper users' operation rates.
China's factory activity growth slowed in June, a private sector survey showed on Monday, with sentiment waning and recruitment cooling as firms grew increasingly concerned about sluggish market conditions.
Copper stocks on SHFE rose 13% to 86,313 metric tons on Friday, reversing a decline that began in late February.
Information from the largest copper mining company also influenced the pricing. Chile's National Statistics Agency again reported a decline in copper production. Thus, the country still can't overcome the decline.
By the end of May, copper production in Chile was 14% lower than the same period last year. This is the fourth consecutive monthly decline. Data on exports also show a decline in copper shipments to the global market.
Codelco, Chile's biggest copper mining company, continues to face problems. Last week, the company reported a new accident at one of its mines. Recent rains forced Codelco to halt operations at some mines in central Chile. Thus, production is likely to decline in June.
In the medium term, the likelihood of a deficit will support the red metal prices.
Copper prices have moved beyond the downtrend on the H1 timeframe. This indicates the formation of a new trend and a new series of waves.
The price is forming the first ascending wave. Whether the formation of the current wave is in the final stage is impossible to determine yet. However, the fundamental potential for a bullish movement is high.
Signal:
Copper’s short-term outlook is to buy.
The target is at the level of 8550.
Part of the profit should be fixed near the level of 8430.
A Stop-loss should be placed at the level of 8190.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
