Copper prices remain muted amid the supply shortage crisis

copper futures price

The copper futures price is up 0.24% at $4.7235 per pound on COMEX.

According to analysts, copper price is expected to soar due to low global inventories and the Russia-Ukraine conflict. Goldman Sachs, on Thursday, released a report pointing out “an extreme fundamental turn” for the first time in a decade, global copper stocks on exchanges declined through March “instead of rising during what is this metals’ main seasonal surplus phase.”

Copper production in Chile, the world’s largest copper producer, has not been able to recover to its pre-pandemic level. While in Peru, the global second-largest producer of copper, production has been disrupted. Peru faces a wave of protests from indigenous communities accusing the mining firms of not providing enough jobs and money to the impoverished locals. Southern Copper Corp., a multinational mining company, has accused the Chilean government of not intervening in the crisis. It says that its Peru mine remains closed after 6 weeks of a standoff with protestors.

Yet the copper prices have barely moved during this period characterized by a recovering China, underperforming Chilean mine supply, and scrap tightness. This had led to Goldman Sachs’ research report to declare that copper is “sleepwalking towards a stockout.”

The conflict in Ukraine will continue to affect copper prices in the future. While Russia accounts for just 3.5% of global copper supply, critically low global inventories and an existing market deficit leave the metal highly sensitive to market sentiment and external factors.

On the technical side, the RSI of Chicago copper futures stood at 52.58 and is currently trading above MA (5) and MA (50) but below MA (20). So, BUY position can be initiated with the following target and stop loss:

TRADE SIGNAL: CHICAGO COPPER FUTURES – BUY AT 4.7600, TAKE PROFIT AT 4.8250 AND STOP LOSS AT 4.6710

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