Copper plunges after breaching key support
Liquidity crunch and banking sector problems continue to fuel concerns of a lower demand due to slowdown in global growth.
By Devangi Joshi, ET Online |
MUMBAI: A breach of key support on Monday continued to pressure copper prices lower on Friday. Liquidity crunch and banking sector problems continue to fuel concerns of a lower demand due to slowdown in global growth.
The base metal breached the key support of $6300 per tonne on London Metals Exchange on Tuesday and traded as low as $5785 today. The metal has been muted since late August.
Its domestic counterpart, November contract on the Multi Commodity Exchange, which made a low of Rs 272.30 today, has lost more than 13 per cent in a week.
���While the recent sell-off was a reaction to breach of a consolidation level, increasing expectations of gloomier global economic conditions pressured prices lower,��� said Harish Gallipeli, research head, Karvy Comtrade.
According to a market participant, a correction in prices was expected as the demand side continues to show contraction. Imports by China, the world���s biggest consumer of the metal, have decline since March, with August imports down 12 per cent.
���Sluggish demand is expected keep copper under pressure and can take prices closer to its cost of production which is near $5,000 per tonne,��� said Praveen Singh, research analyst, Sharekhan Commodities.
On Sep 19, warehouse inventories on LME reached its highest level since Feb 2007 at 209,800, and have declined by nearly 5% from then.
The base metal breached the key support of $6300 per tonne on London Metals Exchange on Tuesday and traded as low as $5785 today. The metal has been muted since late August.
Its domestic counterpart, November contract on the Multi Commodity Exchange, which made a low of Rs 272.30 today, has lost more than 13 per cent in a week.
���While the recent sell-off was a reaction to breach of a consolidation level, increasing expectations of gloomier global economic conditions pressured prices lower,��� said Harish Gallipeli, research head, Karvy Comtrade.
According to a market participant, a correction in prices was expected as the demand side continues to show contraction. Imports by China, the world���s biggest consumer of the metal, have decline since March, with August imports down 12 per cent.
���Sluggish demand is expected keep copper under pressure and can take prices closer to its cost of production which is near $5,000 per tonne,��� said Praveen Singh, research analyst, Sharekhan Commodities.
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On Sep 19, warehouse inventories on LME reached its highest level since Feb 2007 at 209,800, and have declined by nearly 5% from then.
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