Copper’s Uptrend Tested by Inventory Divergence and Chart Barriers

Copper prices steadied near $4.92 per pound Thursday morning, as official CFD and futures data show, following a volatile 24 hours marked by shifting inventories and technical resistance.

The attached chart confirms copper’s struggle to reclaim highs above $4.95, with prices repeatedly testing but failing to break through the upper Bollinger Band.

Copper trades above the 20-, 50-, and 200-period moving averages, which signals an ongoing uptrend. The most recent candles reveal fading momentum as the price hovers at the 9-day moving average.

Trading volume increased during the latest decline, highlighting strong participation in the sell-off and confirming the technical setback. The Relative Strength Index has slipped below 50, indicating that bullish momentum has faded.

The Moving Average Convergence Divergence histogram turned negative, underscoring the loss of upward drive. The 200-period moving average at $4.75 now serves as immediate support, while resistance stands at $4.95.

These technical signals, widely used by traders, suggest a cautious short-term outlook, even as the longer-term trend remains positive. London Metal Exchange data shows copper stocks fell to 148,450 tons, the lowest since early April.

US inventories reached their highest since 2018. This divergence reflects a flow of metal from London to the United States, as buyers hedge against potential tariffs.

Chinese inventories remain at decade lows, with Shanghai Futures Exchange stocks near 116,800 tons and weekly drawdowns exceeding 50,000 tons.

The Shanghai market’s steep backwardation, with prompt contracts commanding a $150 per ton premium, signals significant physical market tightness.

Macroeconomic factors continue to shape sentiment. The People’s Bank of China cut key lending and liquidity rates, supporting factory activity and stabilizing demand. Robust ore output from South America has increased the risk of a wider surplus this year.

The International Copper Study Group projects global mine output will rise 2.3% in 2025, topping 23.5 million metric tons, with a 289,000-ton surplus expected. This outlook puts downward pressure on prices, even as immediate supply remains tight in Asia.

ETF flows remain subdued, with the Sprott Copper Miners ETF showing only a minor uptick of 0.28% in net asset value on June 3. Market participants remain cautious, watching for further trade developments and supply chain adjustments.

The copper market’s next move will likely depend on how quickly inventories in China and the US shift, as well as the impact of ongoing policy changes and macroeconomic signals.

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