Copper on MCX settled up 0.77% at 390.75 and posted its biggest weekly gain since mid-February in response to a weak U.S. dollar and ongoing mine supply concerns. The dollar index is down around 1 percent in the week after the U.S. Federal Reserve signalled a slower pace of monetary tightening than expected. A weaker dollar boosts the buying power of non-U.S. investors. Striking workers at Chile's Escondida, the world's biggest copper mine, are blocking attempts by owner BHP Billiton to renew operations at a major port nearby as the stoppage enters its sixth week.
Fixed-asset investment in China, which consumes nearly half the world's copper, grew 8.9 percent in January and February from a year ago, largely due to strong property and infrastructure construction. In the U.S., factory output increased for a sixth straight month in February, as rising commodity prices boost demand for machinery and other equipment. China’s copper output rose 6.7 percent to 1.37 million tonnes for January-February.
Goldman Sachs said fees to copper smelters in China were falling close to break-even costs of $50-$60 a tonne. The LME stock inflow remains quite elevated. Over the four days since stock inflow totalled 141,625 tonnes, stocks have climbed a further 20,150 tonnes. As the second quarter nears, we are waiting to see if exchange stocks start to fall.
Cancelled warrants on the LME stand at 159,200 tonnes, up from a low of 84,850 tonnes on February 23, so it does look as though the market could see a pick-up in outflow. Technically market is under short covering as market has witnessed drop in open interest by -13.53% to settled at 13589, now Copper is getting support at 387.4 and below same could see a test of 384.1 level, And resistance is now likely to be seen at 392.5, a move above could see prices testing 394.3.