Copper futures were trading higher on Thursday, continuing their rebound after big sell-offs on Tuesday and Wednesday sent the red metal down to its lowest price of the year.
Copper fell earlier in the week as money managers took some bearish developments as a reason to liquidate some positions, and then technical selling exacerbated the decline. Traders came close to sending London Metal Exchange copper futures below $5,500 – but this never happened, and instead, a technical rebound trimmed the losses. So far on Thursday, copper has been trading in the range of $5555-$5658. Support is at $5530 and resistance at $5950. The resistance level for copper has been fairly consistent for a few sessions, but the market tested lower support levels.
Copper prices garnered a great deal of support this year from supply disruptions and this week Freeport MbMoRan received preliminary approval to resume copper concentrate exports from its Grasberg mine in Indonesia. Freeport’s Indonesian unit had not allowed to ship copper when a government ban kicked in on January 12. While partial exports had restarted, the company should soon be allowed to fully resume exports. Meanwhile, according to Reuters, Rio Tinto cut its copper guidance to 500,000-550,000 tons from as much as 665,000 tons as a result of a strike at the Escondida mine in Chile as well as the work stoppage at the Grasberg mine in Indonesia.
Another disappointing development for the copper market, data released this week showed that China’s March refined copper output rose 8.5% year-over-year. This is the highest level of refined copper output since December 2015. At the same time, Chinese data released this week indicated that the country’s economy is showing solid growth. However; there was skepticism over the validity of the data. Another factor that pressured copper earlier in the week was a large jump in LME stocks.