Increasing Economic optimism is likely to push copper prices higher
LME Copper hits 9-1/2-yr high on the backdrop of tight supply, solid demand from both US and China. Increasing economic optimism from solid global manufacturing data is supporting demand for industrial metals such as copper and nickel.
Copper inventories of the metal in LME warehouses hovered around their lowest since 2005. Copper inventory at LME now stand at 73,450 mt as on Feb. 23 2021 which have dropped nearly 89,975 mt in last one year. Also SHFE Copper inventory now stand at 53,975mt as on Feb. 23 2021 which have dropped nearly 111,990 mt in last one year.
Premium for Yangshan bonded copper rose to $75 a ton, its highest since August 2020, indicating solid demand from China for the imported metal. As per a report from Reuters, Shanghai Dalu Futures, a brokerage on the Shanghai Futures Exchange, has built a $1 billion long position in copper contracts within just four days.
Meanwhile as per the International Copper Study Group (ICSG) report, world refined copper market showed a deficit of 77,000mt in November. Between January and November last year, the copper market registered a deficit of 589,000 mt compared to a deficit of 427,000 mt in the same period of the previous year. World stocks of refined copper stood at 1,265 million tonnes at the end of November compared with 1,329 million tonnes at the end of October. The world copper mine production fell by around 0.2% in the first eleven months of 2020. Preliminary data indicates that world refined copper production increased by 1.8% during the first eleven months of 2020. The world apparent refined copper usage increased by 2.5% over the first eleven months of 2020.
LME 3M Copper prices are likely to trade firm while above key support level of $9,070 and $8,892 per mt .It may face stiff resistance around $9,481 and $9,659 per mt.