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The first couple of weeks of 2014 have seen copper drift slightly lower, while still staying close to the upper part of the range. The zone just above $3.40 remains the barrier keeping copper from a squeeze higher. Twice in the last six months the metal has flirted with breaking this barrier, but ultimately it has been unsuccessful. As my colleague David Madden pointed out earlier in the week, Chinese demand was even weaker than anticipated in December. With China remaining the driving force behind global demand, consuming almost 40%, this has stalled any chances of copper moving higher in the short term.
Countering these figures is the news that, buoyed by demand, Rio Tinto was able to deliver 5% more mined copper in the last quarter of the year. This brings its total annual mined copper production levels up by 15% over 2013. Certainly, as one of the larger copper-producing companies, Rio Tinto believes there is potential for an upturn in demand during the year ahead.
Although the relative strength indicator is mid-range, only a break above $3.40 would give us confidence to expect a decent move higher for copper. For the time being, the metal could remain rangebound.