Weekly Outlook on Copper - 15 March 2024

Copper prices surged to an 11-month high following discussions among Chinese smelters aimed at addressing the steep decline in processing fees. The talks, which involved executives from over 15 Chinese plants, included considerations for potential production cuts, raising concerns about a potential shortage in the market.

                      Copper Prices Soar to 11-Month High on Chinese Smelters' Production Cut Talks

The copper prices jumped by as much as 3.5% in response to the discussions, triggering a flurry of activity on the London Metal Exchange. This marked a significant departure from the months of relatively stable trading conditions.

The crisis facing Chinese smelters stems from the collapse of treatment and refining charges, which are the fees paid to smelters for converting concentrate into metal. This collapse has led to discussions about potential output cuts at smelters, which rely heavily on imported raw materials to sustain their operations. As the world's leading producer and consumer of refined copper, developments in China's smelting industry have significant implications for global copper markets. The prospect of production cuts has raised concerns about supply constraints, driving prices higher in the short term.

The outcome of these discussions and any subsequent actions taken by Chinese smelters will be closely monitored by market participants, as they could have lasting effects on the balance between copper supply and demand worldwide.

The technical outlook for copper appears bullish following its recent surge to an 11-month-high. Key technical indicators, such as moving averages and momentum oscillators, suggest strong buying momentum and potential further upside.
 
The price surge has propelled copper above key resistance levels, signaling a breakout from previous trading ranges. This breakout has likely attracted the attention of traders for the long term. Moreover, all the important key indicators like MACD; RSI & Volume have supported the recent rally and also indicate continued upward momentum. On the downside, copper has support around 740 mark while, on the upside, 775 & 788 could be a resistance for copper prices.

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