Copper prices held steady on the Multi Commodity Exchange (MCX) while experiencing declines on both the London Metal Exchange (LME) and Shanghai Future Exchange, reflecting a complex interplay of global economic factors and supply dynamics.

MCX and Global Market Performance

September copper contracts on the MCX traded around Rs 910.75 per kg, showing a marginal increase of 0.05% from the previous day's close. In contrast, LME 3-month contracts were priced at $9,972.50 per metric ton, indicating a downward trend in international markets.

Factors Influencing Copper Prices

Several key factors are currently shaping the copper market:

1. Weak Economic Sentiments: Global economic uncertainties are weighing on copper prices.
2. China's Restocking Activities: The world's largest copper consumer is influencing market dynamics through its inventory management.
3. Benign Dollar Index: Currency fluctuations are playing a role in copper's price movements.
4. Supply Disruptions: Major mines in Chile, Peru, and Indonesia are experiencing disruptions, potentially tightening supply.
5. Robust Demand: Infrastructure projects, energy transition initiatives, and the tech sector (including data centers and artificial intelligence) are driving demand.

China's Copper Imports

Despite expectations, refined copper imports in China have fallen below anticipated levels, contributing to market volatility.

Technical Analysis

Recent market activity shows:

• Copper tested Rs 921.50 before retreating towards the 900 zone.
• Prices remain above key moving averages but face resistance.
• Weekly Relative Strength Index (RSI) near 60 indicates overbought conditions.
• Moving Average Convergence Divergence (MACD) shows early signs of a negative crossover.

Market Outlook

Analysts anticipate copper to maintain a moderately bullish-to-sideways range in the near term. Key levels to watch:

The copper market continues to balance supply constraints against economic uncertainties, with global demand patterns and technical indicators suggesting a cautiously optimistic outlook for the red metal.

Shanghai copper futures have climbed to their highest level in over five months, buoyed by positive developments in US-China trade relations and anticipation of a potential rate cut by the US Federal Reserve. The surge in copper prices underscores the metal's sensitivity to global economic sentiment and monetary policy expectations.

Trade Talk Progress Boosts Copper

The most-traded copper contract on the Shanghai Futures Exchange (SHFE) saw a notable increase, rising 0.36% to 81,120.00 yuan per metric ton. During the trading session, it touched 81,530.00 yuan, marking its highest point since March 28. This upward movement comes on the heels of progress in US-China trade negotiations, with officials from both countries reaching a framework agreement on TikTok. The development has kindled hopes for a more comprehensive trade deal between the world's two largest economies.

Fed Rate Cut Expectations

Market analysts point out that expectations of a US Federal Reserve rate cut are playing a significant role in copper's price rally. A 25 basis point rate reduction has been largely factored into current market prices. Historically, rate cuts tend to boost copper prices through two primary mechanisms:

1. Weakening of the US dollar, making dollar-denominated commodities like copper more attractive to investors holding other currencies.
2. Strengthening demand expectations, as lower interest rates can stimulate economic activity and, consequently, increase demand for industrial metals.

London Metal Exchange Sees Profit-Taking

While Shanghai copper futures rallied, the London Metal Exchange (LME) told a slightly different story. LME copper retreated 0.43% to 10,142.50 per ton, a move attributed to profit-taking after the metal reached a 15-month peak. This divergence highlights the complex dynamics at play in global metal markets.

Mixed Performance Across Metal Markets

The broader metals market showed mixed performance across both the Shanghai and London exchanges. This varied movement suggests that while overall sentiment may be improving, individual metal prices are responding to specific supply-demand factors and regional economic indicators.

Outlook

The copper market's response to geopolitical developments and monetary policy expectations underscores its role as a barometer for global economic health. As trade negotiations progress and central bank decisions unfold, market participants will be closely monitoring copper prices for insights into broader economic trends.

Investors and industry observers are advised to keep a close eye on further developments in US-China trade talks, upcoming Federal Reserve announcements, and global economic indicators that could influence copper demand and prices in the coming weeks.