Copper rises on weak dollar, breaks out of flat trend
Easing Eurozone woes, pulls base metals higher
Ruchika Shah / Mumbai Apr 20, 2012
Easing Eurozone woes, pulls base metals higher
Ruchika Shah / Mumbai Apr 20, 2012
Three-month copper contract on the London Metal Exchange traded higher today, erasing the flat trend continuing for the past three days.
Local copper contract on the MCX also broke out of the three-day humdrum and was trading Rs 1.80 higher, at Rs 420.05 today. The rupee was weak against the dollar after hitting a 14-week low in the last hour of trading yesterday. This helped in pulling local copper prices higher.
Eurozone concerns eased as the region's IFO business climate data released today was better than estimated, said Priyanka Jhaveri, an analyst with Kotak Commodity Services. This strengthed the euro against the dollar, which pushed dollar-denominated commodities such as base metals higher in the global markets.
Benchmark copper contract on the LME was trading at $8,079 per tonne, up $29 from Thursday's close. The contract had been settling at $8,050 for the past three days, she said.
China, the world's largest importer and consumer of base metals, is seen re-exporting its copper stocks from the bonded warehouses at the Shanghai Futures Exchange, to ease LME backwardation.
"Backwardation, is a sign of bullishness," she says. It means that the spot market is tight with high demand and restricted supply. This hints at a bullish trend in base metals for the rest of the day.
Prices at the LME compared to spot market prices, have been lower, which is an unusual trend, Jhaveri says. But this has been the occurrence at LME where copper is going at a discount, while the red metal in the spot market is being sold at a premium.
LME 3-month copper premium, a premium for cash copper against three-month delivery on the world's biggest metal marketplace popped up to $114 per tonne on Tuesday, a level not seen since 2008.
It was going at a premium of close to $80-85 per tonne, which was now down at $44 today due to backwardation, which resulted in rising stocks at LME-monitored warehouses. This is still higher than $10-40 premium at SHFE.
However, copper, pulling the base metal complex, is expected to be bullish in the evening trading session, in the absence of any significant data release later today, Jhaveri said.
According to Kotak Commodity Services, MCX April copper contract may get support at Rs 416 and face resistance at Rs 424, while the 3-month contract is expected to find support at $8,000 and face resistance at $8,150 later today.
Local copper contract on the MCX also broke out of the three-day humdrum and was trading Rs 1.80 higher, at Rs 420.05 today. The rupee was weak against the dollar after hitting a 14-week low in the last hour of trading yesterday. This helped in pulling local copper prices higher.
Eurozone concerns eased as the region's IFO business climate data released today was better than estimated, said Priyanka Jhaveri, an analyst with Kotak Commodity Services. This strengthed the euro against the dollar, which pushed dollar-denominated commodities such as base metals higher in the global markets.
Benchmark copper contract on the LME was trading at $8,079 per tonne, up $29 from Thursday's close. The contract had been settling at $8,050 for the past three days, she said.
China, the world's largest importer and consumer of base metals, is seen re-exporting its copper stocks from the bonded warehouses at the Shanghai Futures Exchange, to ease LME backwardation.
"Backwardation, is a sign of bullishness," she says. It means that the spot market is tight with high demand and restricted supply. This hints at a bullish trend in base metals for the rest of the day.
Prices at the LME compared to spot market prices, have been lower, which is an unusual trend, Jhaveri says. But this has been the occurrence at LME where copper is going at a discount, while the red metal in the spot market is being sold at a premium.
LME 3-month copper premium, a premium for cash copper against three-month delivery on the world's biggest metal marketplace popped up to $114 per tonne on Tuesday, a level not seen since 2008.
It was going at a premium of close to $80-85 per tonne, which was now down at $44 today due to backwardation, which resulted in rising stocks at LME-monitored warehouses. This is still higher than $10-40 premium at SHFE.
However, copper, pulling the base metal complex, is expected to be bullish in the evening trading session, in the absence of any significant data release later today, Jhaveri said.
According to Kotak Commodity Services, MCX April copper contract may get support at Rs 416 and face resistance at Rs 424, while the 3-month contract is expected to find support at $8,000 and face resistance at $8,150 later today.
Courtesy: Business Standard
