Last Updated : 05 December 2012 at 15:15 IST
Technically on daily charts MCX Copper February contract looks sideways to positive but it's trading near to it's very important resistance level of Rs 450.
“Now the next bull run is expected in copper only above Rs.450 and if prices sustain above Rs.450 then one can expect Rs.465 levels in coming sessions”, said Ankush Kumar Jain, Manager-Research, metals-energy, Commodity Online.
“On the bottom side very good support is expected at Rs.443 and if prices sustain below Rs.443 only then I would expect some correction in copper prices to Rs.432 levels.” he added.
So traders are advised to take a fresh position on either side in copper only above/below the aforesaid levels for coming sessions as long as the trade takes place in the range of Rs 443-450.
Meanwhile, on India's MCX, copper for February delivery was seen trading at Rs.446.25 a kilogram, a marginal gain of 0.12% around 1.48 PM IST, Wednesday.
Barclays' view on international copper
With demand still soft and the stock overhang large, Barclays thinks copper prices are likely to remain under pressure despite the improvement in economic data.
“Against the backdrop of higher mine supply, there is considerable downside risk to our H1 copper price forecast of $8,850/t. A sustained improvement in prices looks unlikely until there is evidence of draws in Chinese inventories.” Barclays said in a report.
China’s trade flows may become more two-way in 2013, with regular exports taking place in addition to imports. Smelters appear to have negotiated an export premium on tolling exports. While volumes are unknown, we think regular exports in the 10-15k tonnes per month range may be possible.
A majority of traders Barclays spoke to in a copper meet expected volumes to fall, but by no more than 8-10%, which Barclays estimate would roughly translate into a reduction of 190-240k tonnes per annum.
Traders consider relatively steady supply as more important in times of uncertainty, which outweighs the consideration of premiums. On the other hand, some traders and investors forecasted a much steeper fall if current premiums in copper markets hold. In terms of the potential impact on the market balance, a reduction of Chinese intake could be partially offset by an increase of contracted tonnage among European and US buyers.
European consumers are worried about copper availability in the face of low LME stocks, and US buyers may also take modestly more given the better construction demand outlook. However, such increases may not fully offset a potential drop in Chinese imports, Barclays said.
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