Copper price posted a 5th straight day of gains to complete its recovery for 2020 and take the asset to new 2020 highs. Copper price futures have gained 2.04% on the day as at the time of writing, as China’s demand for copper increased by 4% from the lows of the past two months.
More importantly, copper price action is responding to the mine shutdowns in Chile as a result of an outbreak of the coronavirus in the mining districts of the country. The supply concerns out of Chile occur as reports indicate that the coronavirus has hit thousands of workers in the copper mines. The state-owned copper mining firm Codelco has reported more than 2430 coronavirus infections among its staff, forcing it to call off its El Teniente mine expansion as well as suspending all operations in the mining-rich zones of Northern Chile.
At 5.6 million metric tonnes production as at 2019 (Statista), Chile is the world’s largest copper producer, and a blow like this to the country’s output looks set to impact copper prices in the short term and medium term.
Technical Outlook for Copper Price
Copper price action has taken out the critical 2.8695 resistance (16 Jan 2020 high). The next potential pitstop to the upside is at the 2.9795 resistance level, where price formed tops between February to April 2019. 3.0920 (August 2014 highs) could be the new target if the advance overcomes 2.9795.
On the flip side, a retreat from present levels retests 2.8695, which would now be acting as a support. A breakdown of this price level targets the support zone at 2.7490, with the floor of this zone at 2.7195 and the 2.6800 support level located not too far away.