Copper Holds Gains as Global Liquidity Expands Despite Inventory Surge

Copper futures opened September trading at $4.52 per pound, marking modest gains as the industrial metal consolidated above key technical support levels.

Trading Economics data shows the red metal climbed 0.19% from Friday’s close, extending August’s 3% monthly advance despite growing inventory concerns across major exchanges.

The London Metal Exchange three-month contract traded at $9,923.50 per metric ton, up 0.22% in early European sessions.

Technical indicators reveal copper holding above its 200-day moving average at $4.55, while the Relative Strength Index remains above 60, suggesting continued bullish momentum.

The Moving Average Convergence Divergence indicator shows a bullish crossover below the zero line with positive histograms, supporting the constructive price outlook.

LME copper inventories reached 158,900 metric tons, hitting a three-month high as supply adjustments follow earlier tariff-related disruptions. However, analysts note this level remains significantly below historical averages, indicating underlying market tightness.

COMEX stockpiles continued accumulating to 277,843 metric tons, the highest since January 2004, primarily reflecting arbitrage flows ahead of anticipated U.S. tariffs.

Chinese inventories on the Shanghai Futures Exchange declined 2.39% for the week ending August 29, dropping to 79,748 metric tons. This reduction suggests healthy domestic demand in the world’s largest copper consumer, supporting price stability despite Western inventory builds.

Global liquidity conditions provided additional support for the industrial metal. The Bank for International Settlements reported foreign currency dollar credit grew 5% year-over-year to $13.7 trillion by the first quarter of 2025.

Euro and yen credit expanded even faster at 10% and 6% respectively, reaching €4.6 trillion and ¥65.6 trillion. The Global Liquidity Index, currently at 47.9 on a scale of 0-100, projects reaching near 70 by mid-2026, supporting commodity prices.

Chile’s Codelco, the world’s largest copper producer, reported a 9% year-over-year production increase in the first half of 2025.

However, the company subsequently lowered its full-year guidance to 1.34-1.37 million metric tons following the tragic El Teniente mine collapse.

Global mine production rose 2.7% in the first half, with concentrate output increasing 2.8%, though this remains insufficient to close structural deficits.

Investment banks maintained constructive copper outlooks despite recent volatility. Goldman Sachs raised its second-half 2025 average price forecast to $9,890 per metric ton, while UBS set a medium-term target of $11,000 by September 2026.

However, analysts warn that recession risks and continued Federal Reserve quantitative tightening could limit upside potential. Chart analysis reveals copper trading in a narrow consolidation range following July’s dramatic volatility when prices peaked near $5.96 per pound.

The four-hour chart shows sideways movement with slight upward bias, while volume remains steady despite the summer trading lull. Key resistance stands at $4.68, with support at $4.43 providing a floor for any near-term weakness.

Open interest on COMEX copper futures held at 190,049 lots, down 2.58% from the previous week but maintaining relatively healthy levels.

The technical rating remains neutral as market participants await September catalysts, including potential Federal Reserve policy signals and Chinese stimulus measures.

Copper-focused exchange-traded funds saw continued institutional interest, with the Sprott Copper Miners ETF gaining 26.99% since inception.

However, analysts caution that elevated inventory levels and potential demand headwinds could pressure prices if global economic growth slows further.

The metal faces a critical test at current levels as markets brace for traditional September volatility following the summer’s consolidation period.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

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