Copper prices fell to their lowest level in eight weeks on rising concerns about China stock supply concern to control rising commodity prices. It is speculated that the State Reserve Bureau, is planning to gradually release some of its stockpiles of copper, aluminum, and zinc over the coming months leading to the downturn. LME Copper 3M is currently trading near $9,537 per mt which is sharply lower from $10,746 per mt registered on May 10.
The downtrend in copper prices started after fears increased regarding; Chinese authorities could take measures to curb a recent price rally in commodities.
Copper prices were also under pressure ahead of the FOMC interest rate decision later today, which is likely to provide direction to metals prices. The U.S. central bank is not likely to take any action on interest rates or tapering of monthly asset purchases. But it will be interesting to watch the Fed's forecasts on inflation and the strength of the economic recovery.
Meanwhile, as per a report from Chile’s national mining association Sonami, Chile’s mining sector is set to grow 1% this year. Last year industry growth was at 1.3% despite Chile’s economy shrinking by 5.8%. Chile’s Central bank figures show that in 2020 mining exports were at $41.8bn, while during the first five months of this year they reached $23.2bn.
On the economic data front, US May manufacturing production increased +0.9% m/m against expectations of +0.8% m/m. US May retail sales dropped -1.3% m/m and -0.7% m/m ex-autos, against expectations of -0.8% m/m and +0.4% m/m ex-autos. The June Empire manufacturing survey general business conditions index fell -6.9 to 17.4, against expectations of 22.7.
The US June NAHB housing market index unexpectedly fell -2 to a 10-month low of 81, weaker than expectations of unchanged at 83. The US May PPI ex-food & energy rose +4.8% y/y, right on expectations and the highest level since the data series began in 2010. US economic data was mostly mixed for metals.
As of June 15, Copper LME warehouse stock stands at 138,300 mt which has increased from 119,875 mt a month earlier.
LME 3M Copper prices are likely to face stiff resistance near 50 days EMA at $9,743 per mt and 20 days EMA at $9,921 per mt while it may find immediate support level around 100 days EMA at $9,246 per mt.