The price of copper moved higher for the second consecutive day. Copper is maintaining its medium-term uptrend by defending the significant support of recent highs.
“Many assets rallied as China’s government accelerated the reopening of the economy. Copper has had the strongest start to a year since 2003,” said Bank of America analyst Michael Widmer.
Chinese demand continues to lag
According to the Chinese central bank’s quarterly policy implementation report issued on Friday, China’s economy is forecast to bounce in 2023, and monetary policy will be precise and aggressive. Copper stockpiles continued to rise in China, but at a slower rate than in recent weeks, and import premiums declined once again, indicating weak demand.
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This week, surveys of purchasing managers in China’s industrial sector are likely to indicate growth. The Purchasing Managers’ Index (PMI) reliably predicts metals consumption and prices.
“The frustrating thing for those investors is that they’ve parked their money in copper, and the fundamentals haven’t actually changed much,” said Liberum strategist Tom Price.
On the other hand, the supply of copper from Indonesia, Peru, and Chile has been interrupted. Last week, First Quantum Minerals Ltd said that it has ceased ore processing activities at a significant copper mine in Panama.
Mergers and acquisitions
In other news, as part of its global effort to obtain raw materials for electric car batteries, automaker Stellantis announced on Monday that it has paid $155 million to acquire a minority share in a copper mine in Argentina.
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The business purchased a 14.2% share in McEwen Copper, a McEwen Mining of Canada subsidiary that holds the Las Azules property in Argentina. Starting in 2027, Los Azules proposes to manufacture 100,000 tons per year of 99.9% pure cathode copper, a critical component in automobile battery production.
Daily graph remains positive
As previously said, the price has maintained significant support at recent highs of $3.95. Hence, the forecast for the medium term remains optimistic. The following objective might be $4.25, and the price could perhaps challenge the prior cycle highs at $4.35. If the price falls below $3.95, a further substantial decrease toward the 200-day moving average under $3.75 is possible.
Copper 1D chart, source: tradingciew.com, author’s analysis