Commodity Radar: Supply crunch, AI-led demand fuel copper’s record rally. Do current levels offer favourable risk-reward?

Domestic copper prices continued their sharp upward march on Tuesday, tracking global prices that have touched record highs amid growing concerns over supply disruptions and resilient long-term demand from electrification and artificial intelligence-linked sectors.

May copper futures rose 1.3%, hitting the day’s high of Rs 1,387 per kg. The price finished significantly higher on Monday, continuing the previous week’s uptrend.

The MCX copper prices have corrected 13% from the peak of Rs 1,589.80 per kg.


Commenting on the current trends, Ajit Mishra, Senior Vice President, Research at Religare Broking, said global copper prices rose to a record high of $6.4 per pound because traders are worried about supply shortages and expect strong future demand.

“The US-Iran conflict disrupted exports of sulphur and sulphuric acid from the Middle East since March. These materials are important for copper refining. Due to shortages, China has stopped exporting them, which further tightened the net supply. As a result, copper producers in Chile faced difficulty getting enough refining materials, forcing some plants to reduce production. Lower supply and strong buying pushed copper prices sharply higher. Fundamentally, global copper remains supported by supply concerns, electrification demand, AI/data-centre demand, and geopolitical disruptions in supply chains,” Mishra said

Technical outlook

Decoding the charts, Mishra said the weekly chart shows a strong long-term uptrend, and the counter has breached strong resistances after a long span in a single day. MCX Copper is currently trading above the 21-week moving average and steadily climbing along an ascending trend line with higher highs and higher lows. RSI near 70 shows strong momentum, though short-term pullbacks can happen after such a sharp rise, he added.

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Trading strategy

Against the recent run-up, wait for a corrective phase towards the Rs 1,355 - Rs 1,360 support region and place a stop loss below Rs 1,340. Maintain buy on dips for the target objectives of Rs 1,410 - 1,420.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)