Bulls take a shine to copper
Copper price has bounced back to levels above $7,000 a tonne after the August drop. The price had consolidated on continued weakness in the market, and is currently buoyed by profit taking in the international markets.
By Deepa Krishnan, TNN |
MUMBAI: Copper price has bounced back to levels above $7,000 a tonne after the August drop. The price had consolidated on continued weakness in the market, and is currently buoyed by profit taking in the international markets. In the domestic futures, forward month contracts are trading higher than the near month futures indicating a bullish trend in the next few months.
According to analysts, most traders are not keen to sell presently in anticipation of a better price. This would either mean that the demand would outstrip supply or there could be a supply shortage in the future. Also, exports will be lower from countries where the currency is strong.
The present LME 90-day price was at $7,050 per tonne. In domestic futures, the price was up by Rs 4 per kg, in the near month contract at Rs 275.30 per kg from Rs 271.65.
A Kotak Commodities report said, copper November has a good resistance at Rs 292.5 and strong support at Rs 270. Good buying is expected if market does not break the level of Rs 270. Reducing demand and appreciating dollar will keep prices under pressure in the short term. Short covering is expected which can give a small spike in the prices.
Bombay Metal Exchange’s (BME) Surendra Mardia said: “The situation in copper will be clear only when crude and gold become more stable. As of now, it is very difficult to say how copper prices will move. Traders are comfortable with prices between $7,000 and $7,500 a tonne.” Copper prices had averaged $7200 a tonne during 2007 and tested a year high of $8,335 supported by heavy fund buying, strong Chinese imports and rallying commodity prices.
Softness in US industrial metal demand would be a setoff against Chinese appetite. Markets would also be supported by a weakening dollar due to a lower interest rate regime adopted by the US Federal Reserve, according to a report by MAPE Admisi Commodity Research.
According to the International Copper Study Group (ICSG), copper market surplus would shrink to 10,000 tonne in 2007 from 230,000 tonne in 2006. The group, however, expects another large surplus of 250,000 tonne for 2008. Copper mine production is expected to grow by 7.6% and refined copper production to surge by 4.6% in 2008. Copper demand would be growing at a moderate pace by 3.8%.
According to analysts, most traders are not keen to sell presently in anticipation of a better price. This would either mean that the demand would outstrip supply or there could be a supply shortage in the future. Also, exports will be lower from countries where the currency is strong.
The present LME 90-day price was at $7,050 per tonne. In domestic futures, the price was up by Rs 4 per kg, in the near month contract at Rs 275.30 per kg from Rs 271.65.
A Kotak Commodities report said, copper November has a good resistance at Rs 292.5 and strong support at Rs 270. Good buying is expected if market does not break the level of Rs 270. Reducing demand and appreciating dollar will keep prices under pressure in the short term. Short covering is expected which can give a small spike in the prices.
Bombay Metal Exchange’s (BME) Surendra Mardia said: “The situation in copper will be clear only when crude and gold become more stable. As of now, it is very difficult to say how copper prices will move. Traders are comfortable with prices between $7,000 and $7,500 a tonne.” Copper prices had averaged $7200 a tonne during 2007 and tested a year high of $8,335 supported by heavy fund buying, strong Chinese imports and rallying commodity prices.
Softness in US industrial metal demand would be a setoff against Chinese appetite. Markets would also be supported by a weakening dollar due to a lower interest rate regime adopted by the US Federal Reserve, according to a report by MAPE Admisi Commodity Research.
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According to the International Copper Study Group (ICSG), copper market surplus would shrink to 10,000 tonne in 2007 from 230,000 tonne in 2006. The group, however, expects another large surplus of 250,000 tonne for 2008. Copper mine production is expected to grow by 7.6% and refined copper production to surge by 4.6% in 2008. Copper demand would be growing at a moderate pace by 3.8%.
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