Copper price remains on course towards its target of a 10-year high despite Tuesday’s pullback. On Wednesday, it recouped some of the previous session’s losses as its demand soars. Supply concerns have further fuelled the rallying.
Reasons Behind Copper Price Rallying
Copper price continues to find support in the recent data on a reduction in copper inventories. As at 26th April, the stockpiles in warehouses registered with the London Metal Exchange were at 155,100 tonnes. The figure represents a decline of more than 10% over the past 10 days. Analysts have indicated that the inventories are likely to reduce even further.
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The ongoing focus on green infrastructure, coupled with President Biden’s $2 trillion plan, have fuelled optimism on heightened demand for the red metal. Electric vehicles are increasingly gaining popularity as a means of reducing carbon footprint. Notably, electric automobiles use over double the amount of copper required in a car relying on an internal combustion engine. As for Biden’s infrastructure plan, those looking to invest in commodities are keen on whether the US lawmakers will accept the proposal. If the proposal passes into law, the expected surge of copper price to $15,000 by 2025 will become more probable.
Copper Price Technical Outlook
The red metal has recouped some of its losses from the previous session. At the time of writing, copper futures’ continuous contract was at $4.4855 after hitting an intraday low of $4.4165. On Tuesday, it hit $4.5190, which is its highest level since August 2011. At that level, it was in the overbought territory with an RSI of 84.13. With this in mind, the pullback is not a signal that the rallying of copper price has eased. On a 4-hour chart, it is still above the 5-week and 10-week exponential moving averages.
With the ongoing rise in demand, the metal’ prices are likely to soar higher to $4.5530, which would be its highest level since March 2011. Above that, the level to watch out for is February’s 2011 high of $4.6520. On the flip side, it could drop back to $4.4165. If it manages to move past that support level on the downside, the bears will be testing 4.3750.