Copper prices slipped on Tuesday as worries over global economic recovery continue. Rising coronavirus cases all across Europe and the UK are stoking concerns that demand for industrial metals may start to drop again. Also, the latest data indicate that copper stocks in the warehouses of the London Mercantile Exchange have doubled in the last two weeks.
Today’s speech by the US Fed Chair Jerome Powell is also adding to the mix. At an event organized by the National Association of Business Economists, Powell warned that recovery of the US economy remained incomplete and that there was always the potential for a downward spiral. Recall that the manufacturing PMI numbers in the US were short of expectations, which indicates that US manufacturing is not recovering as fast as expected.
Copper prices were seen trading flat, off intraday highs of 2.9765 per pound. Losses appear to have been capped as there are growing concerns of a potential miners’ strike in Chile’s Candelaria copper mine. The miners’ union is said to have rejected an enhanced contract offer from the mine owners, which could pave the way for industrial action and subsequent supply disruption. Several mines are in negotiations with owners, and analysts at Saxo Bank and UBS agree that copper prices remain in a precarious position at the start of the 4th quarter.
Copper price on the daily chart shows that prices have stalled between the 2.9795 resistance and the 2.9510 support. A breakdown of support targets 2.9165 initially, with 2.8695 and 2.8020 lining up as additional downside targets.
A contrarian move by buyers could see copper prices breaching the resistance at 2.9795, targeting 3.0010, with 3.0275 and 3.0920 lining up as potential targets to the north. A resolution of the range-bound situation could follow in a few days when the labour dispute situations in Chile attain more clarity.
