Copper CFDs are gaining 2.30% today, approaching the next important level of USD 11 000 per tonne. At the same time, copper is posting the biggest gains among the other industrial metals. At the moment, the main upward catalyst is the squeeze on Chinese processors' margins, following the collapse in the supply of copper ore and concentrates last year. The optimistic outlook is supported by several strong factors, including rising demand from the renewable energy sector, electric vehicles and the growing artificial intelligence (AI) sector.
The market is seeing an increase in the refined copper deficit, with Goldman Sachs expectations pointing to a further increase in the deficit to over 400 000 tonnes by the end of the year. Furthermore, relatively good PMI data from China does not point to a potential collapse in the demand side in the coming months.
Looking at copper quotations (Copper W1), the previous ATH level has been broken and at the market open an upward gap can be noticed. At the same time, the price is approaching the psychological barrier of USD 11 000 per tonne. Around these levels, we can expect increased selling pressure. Despite the promising outlook, fundamental data have been pointing to rising copper stocks for some time. Looking at historical formations, copper has been establishing local peaks shortly after peaks in stocks, which could suggest that the range for upside is already limited.
Source: xStation 5
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