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Copper prices perk up after weekly fall

Copper prices rebounded after posting consecutive weekly decline, helped by low stocks and expectations of a demand pick-up in the autumn season but gains were capped by concerns property sector and weak economic condition in China. The data from the People's Bank of China showed that the new bank loans tumbled 89% from June to the lowest since late 2009, despite the cut in benchmark interest rates raised concerns over the growth of the worlds second largest economy. Besides, recent economic numbers including fall in import and exports, shrinking factory inflation and deflation in consumer prices had pointed to a demand slowdown in China.

Meanwhile, China cut its one-year benchmark lending rate as authorities seek to ramp up efforts to stimulate credit demand, but surprised markets by keeping the five-year rate unchanged amid broader concerns about a rapidly weakening currency. The one-year loan prime rate (LPR) was lowered by 10 basis points to 3.45% from 3.55% previously, while the five-year LPR was left at 4.20%.

Additionally, a strong U.S. dollar also pressured the metal as the other currency holders find the dollar denominated expensive.

China's July refined copper output jumps 14.5% y/y

China's refined copper production in July jumped 14.5% to 1.03 million metric tons year-on-year, although sliding from a record high scaled in the prior month, data from the National Bureau of Statistics showed. On a daily basis, average copper output stood at 33,226 tons during July.

Copper market in 65,000 metric tons deficit in May 2023 - ICSG

The global refined copper market showed a 65,000 metric tons deficit in May, compared with a 33,000 metric tons surplus in April, the International Copper Study Group (ICSG) said in its latest monthly bulletin. For the first 5 months of the year, the market was in a 287,000 metric tons surplus compared with a 74,000 metric tons deficit in the same period a year earlier. World refined copper output in May was 2.32 million metric tons , while consumption was 2.38 million metric tons. When adjusted for changes in inventory in Chinese bonded warehouses, There was a 108,000 metric tons deficit in May compared with a 16,000 metric tons surplus in April, the ICSG said.

Warehouse stock level

The Copper inventory levels in LME registered warehouses increased last week by 6825 MT and totalled 92200 MT. The inventory level in SHFE registered warehouses decreased 13687 MT to 39228 in the last week. COMEX warehouses showed a decline by 1941 MT last week and totalled 41444 MT.

Outlook:

COMEX Sep: Mild consolidation with negative bias may be seen if trades sustain below 3.90. Recovery moves expected to sustain only above the same resistance.

MCX Sep: Steady rebounds above 756 may strengthen the prices. Whereas, weakness expected if prices dip below 700.

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