Copper CFDs are gaining 2.30% today, approaching the next important level of $11,000 per tonne. At the same time, copper is posting the biggest gains among other industrial metals. At the moment, the main upside catalyst is the margin squeeze of Chinese processors, following the collapse in supply of copper ore and concentrates last year. The optimistic outlook is supported by several strong factors, including growing demand from the renewable energy sector, electric vehicles and the growing artificial intelligence (AI) sector.
There is an increase in the deficit of refined copper in the market and Goldman Sachs expectations indicate a further increase in the deficit to over 400,000 tonnes by the end of the year. Furthermore, the relatively good PMI data from China does not indicate a potential collapse in demand in the coming months.
Looking at the prices of copper (Copper W1), the previous ATH level has been broken and an upside gap can be seen at the market open. At the same time, the price is approaching the psychological barrier of $11,000 per ton. Around these levels, we can expect more selling pressure. Despite the promising outlook, fundamental data has long pointed to a rise in copper inventories. Looking at historical formations, copper has established local highs shortly after stock highs, which may suggest that upside room is already limited.
Source: xStation 5
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