Copper on MCX settled up 1.34% at 394 as supply disruptions in Chile and Indonesia lent support, but still posted a second straight weekly drop as concerns over the demand outlook weighed. The metal used in construction fell 3 percent on Thursday, its biggest one-day drop in 17 months, as traders flagged persistent worries over Chinese consumption.
Some investors also cashed in after copper hit a 21-month high of $6,204 on Feb. 13 on supply outages from major copper mines and hopes a pledge by the administration of U.S. President Donald Trump to lift infrastructure spending would fuel demand. China's refined copper imports fell 14 percent last month, Chinese customs data showed.
Strike action at the Escondida copper mine in Chile, which accounts for about 6 percent of world supply, and a halt to the Grasberg copper mine in Indonesia by Freeport McMoRan, gave copper bulls solace, however. Three-month copper on the London Metal Exchange closed at $5,928 a tonne, up 1.2 percent from the previous day but still half a percent lower on the week. Traders say a generally higher dollar due to mounting speculation that the U.S. Federal Reserve will raise interest rates next month was weighing on industrial metals because they are priced in dollars and cost more for holders of other currencies.
In the shorter term however, supply disruptions in Chile and Escondida are expected to support prices, as is stronger manufacturing growth around the world. Technically market is under short covering as market has witnessed drop in open interest by -12.9% to settled at 8685 while prices up 5.2 rupees, now Copper is getting support at 390.3 and below same could see a test of 386.6 level, And resistance is now likely to be seen at 396.7, a move above could see prices testing 399.4.