Copper Prices Retreat as Inventories Shift and Technicals Signal Weakness

Copper prices retreated in the last 24 hours, with official data showing London Metal Exchange (LME) cash copper settling at $9,655 per ton on June 2, while US futures hovered near $4.77 per pound.

The market’s recent volatility reflects a complex interplay of inventory flows, trade policy uncertainty, and shifting demand patterns. The latest chart data reveals copper futures dropping from highs near $4.95 per pound to test support around $4.77.

The four-hour candlestick chart shows a clear rejection at the upper Bollinger Band, followed by a move through key moving averages, including the 50-period and 200-period lines.

The price now sits just above the lower Bollinger Band, with the 200-period moving average at $4.74 acting as immediate support. The Relative Strength Index (RSI) has slipped below 50, indicating fading bullish momentum.

The Moving Average Convergence Divergence (MACD) histogram has turned negative, confirming a loss of upward drive. Volume increased on the decline, suggesting strong participation in the sell-off.

Market fundamentals underscore the technical picture. LME copper stocks fell to 148,450 tons, their lowest since early April, while US inventories reached their highest since 2018.

This divergence reflects metal flowing from London to the United States as buyers seek to shield themselves from potential tariffs. Chinese inventories remain at decade lows, with Shanghai Futures Exchange (SHFE) stocks near 116,800 tons and weekly drawdowns exceeding 50,000 tons.

Copper Market Outlook

Despite a global surplus forecast of 289,000 tons for 2025, immediate supply remains tight in Asia, as shown by steep backwardation in Shanghai, where prompt contracts trade at a $150 premium over three-month futures.

Macroeconomic developments continue to shape the copper market. The People’s Bank of China cut key lending and liquidity rates, signaling intent to support manufacturing.

However, Chinese demand growth projections have slowed, and US manufacturing data missed expectations. Trade tensions persist as the US considers tariffs on copper imports, prompting preemptive stockpiling and narrowing the price gap between US and global markets.

Technical analysis points to a market at a crossroads. The failure to hold above $4.85 signals that bulls lack conviction. The price now tests support at $4.75, with the next key level at $4.63.

Momentum indicators, including the RSI and MACD, suggest further downside risk unless buyers step in. The Bollinger Bands indicate increased volatility, and a break below current support could trigger additional selling pressure.

In summary, copper’s recent decline reflects a combination of technical exhaustion, shifting inventory positions, and macroeconomic uncertainty.

The market remains vulnerable to further downside unless fundamentals or policy developments shift decisively. Traders and industrial buyers continue to watch inventory flows and policy headlines for the next move.

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

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