Copper prices plunged over 3.5% on Tuesday, with the metal slipping to $9,618.80/t amid concerns over China's financial moves.
The market is abuzz for the second day with rumors that China could release part of its state reserves of non-ferrous metals (copper, aluminum and zinc), which could be another measure to rein in the rally on the commodity market. Production costs for manufacturers need to be reduced, and this is where China could take emergency measures. Copper is very sensitive to and reacts proactively to such risks.
The technical picture in copper trading implies that prices might drop towards $9,550/t. If so, the market would have to brace for the subsequent train of events: if external negativity persists and the support level is breached at $9,556, prices will move to the vicinity of $9,500. Conversely, if the negativity plays itself out and the support levels hold, copper could consolidate within the range of $9,550-9,730/t.