LME Copper prices are trading near $9,500 per mt, sharply higher from the recent low of $8,655.50 per mt registered on Mar. 4. However, it is marginally lower from the recent top of $9,615.50 per mt registered on Feb 25. Copper prices are finding support from positive economic data, however, the rising number of Covid-19 cases globally is likely to limit the gains.
On the economic data front, Japan’s manufacturing activity expanded for a third month in April while a contraction in the service sector continued amid a fresh wave of coronavirus infections. The au Jibun Bank Japan’s purchasing manager’s index for manufacturing sector activity rose 0.6 points to 53.3, while its measure of service sector activity was unchanged at 48.3.
Additionally, Japan’s key consumer prices fell at a slower pace in March for an eighth straight month. Consumer prices excluding fresh food edged down 0.1% from a year earlier, after a 0.4% decline in February, with smaller falls in energy costs helping narrow the drop, the ministry of internal affairs reported Friday. Economists had forecast a 0.2% decrease.
US weekly initial unemployment claims unexpectedly fell -39,000 to a 13-month low of 547,000 against expectations of an increase to 610,000. Also, the March Chicago Fed national activity index rose +2.91 to an 8-month high of 1.71, against expectations of 1.25. In addition, March's leading indicators rose +1.3% m/m, stronger than expectations of +1.0% m/m However US March existing home sales fell -3.7% m/m to a 7-month low of 6.01 million, against expectations of a decline to 6.11 million.
Robust economic recovery in China is supporting copper prices. In the first quarter China record growth of 18.3% from last year's deep coronavirus slump. China's rebound has been led by export demand. China’s retail sales increased 34.2% year-on-year in March, against expectations of a 28.0% gain. China’s factory output grew 14.1% year-on-year in March, slowing from a 35.1% surge in the January-February period and lagging a forecast 17.2% rise.
Copper inventory at LME warehouses has increased by 45,075 mt or 39.6% in the last 30days and now stands at 158,975 mt as of Apr. 22 2021. Also, SHFE warehouse stock has increased by 8.9% or 10,136 mt in the last 30 days and now stands at 124,503 mt as of Apr. 22 2021. Increasing warehouse stock is indicating poor physical demand.
According to a Reuters report, a jump in copper scrap supply this year on decade-high prices is unlikely to meet robust demand, leaving shortages that could trigger stock draws and further price gains. The market needs about 10.8 million tonnes of copper scrap this year compared with 9.3 million tonnes in 2019.
Antofagasa's (OTC:ANFGF) copper production in January-March fell 5.7% year-on-year to 183,000 tonnes due to a surge of COVID-19 infections in Chile.
LME Copper prices are likely to trade firm while above key support level of 20 days EMA $9,160 per mt and 50 days EMA at $8,899 per mt. However, LME Copper prices may find stiff resistance around $9,663 per mt and $9,973 per mt.