China accounts for almost half of the global copper demand. Power consumption in the country, normally a good indicator of the metal’s demand, rose 6.00% in April, encouraging investors to increase their bullish bets on copper.
The recent weakness in the US dollar is further supporting prices, as a cheaper greenback makes the dollar-denominated industrial metal cheaper for foreign consumers.
Furthermore, strengthening manufacturing fundamentals highlighted by the PMI figure overnight suggests that economic activity remains robust, helping improve the copper outlook.
On the supply side, copper stocks in London Metal Exchange warehouses are down over -30.00% since early May to 243,300 tonnes, reflecting the tightness in the market. The resulting price action has seen the near-term trend turn decidedly bullish.
If prices manage to record a daily close above $2.700, copper could conceivably rally all the way to $2.800 a pound.