MCX Copper has been Trading with Negative Bias (25, May-2021)

On the Multi Commodity Exchange, Copper Price closes at 749 per Kg with a decline in three out of five trading sessions

Nagercoil, India. The MCX Copper rate in India closes at Rs.749 per kg on Tuesday, May 25. The analysts said that they remain bullish on copper as the market continues to see a significant supply and demand imbalance as demand is expected to rise amidst a growing supply crunch. As vaccines continue to roll out, we view a global economic recovery, additional government stimulus, and rising inflation expectations as positive momentum drivers for base metals. 

The Base Metal traded in the negative territory with a loss of Rs 10 or 1.35 percent on the domestic bourse.The prices declined in three out of five trading sessions on the MCX. The Year to Date price of Copper touched a high of 798.10 and a low of 588.2 INR. The Year to Date average price of Copper is 683.92. In the futures market, the cost of Copper touched a month high of 798.10 and a low of 739 INR. The monthly average price of Copper for May is 770.03.The Non-Ferrous Copper Metal price settled with a loss of 1.35 percent at Rs. 749 per kg in MCX. 

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX Copper has been trading with negative bias and price declined approximately 30 points in the previous session and traded in the support zone of Rs 756-748. A marginal correction against the current downtrend has already been witnessed and the market made a high of Rs 766.7 which could get tested again in the evening session.”

 “If the copper price continues to rise there is bound to be a drop in demand as manufacturers opt for cheaper alternatives instead of refined copper. We may see copper scrap increasingly replacing the use of refined copper, which will affect quality standards,” Sterlite Copper CEO Kumar said.

Copper is a key metal for infrastructure development in India and is a core metal, a trend borne out globally as well. Ensuring local availability instead of imports can help the continued growth. Kumar said that Indian manufacturers are likely to get back into production which will propel demand once the pandemic eases. “Positive movements by the government towards EVs and renewable energy are also driving growth in demand. Post Covid, the government spending on infrastructure is also likely to increase, which will help sustain demand.” 

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In COMEX (US Metal Exchange) - Copper prices rose to a record of 4.8 USD/lbs on May 11 before dropping 5.73 per cent to 4.54 USD/lbs during the weekend but this declining trend may not last for long. Analysts see copper ruling firm or heading up a little more during the latter part of this year, particularly once the Covid-19 pandemic subsides in US.

On Monday, copper prices were near a month’s low after China said it will manage its commodity supply and demand to control any unreasonable increase in prices. China has been forced to act after Chinese consumers began to complain about high prices. This has led to producers dipping into their inventories, which are being reduced now.

Declared as the “new oil”, copper has been under pressure over the last fortnight, and it became intense last week when prices dropped nearly 4.5 per cent. There are other factors that are putting pressure on the metal, which is witnessing demand from the power, electric vehicles (EVs) and construction sectors.

According to Chile copper agency Cochilco, demand for refined copper this year is expected to total 24.2 million tonnes (MT), up 3.4 per cent over last year. This will be mainly from countries other than China, which are expected to raise their consumption.

Mine production, at the same time, is projected to increase by two per cent to 21 MT as output recovers post-Covid-19. According to Dutch multinational financial services ING economic and financial analysis, imports of copper concentrate by China fell 4.8 per cent year-on-year and 11.5 per cent month-on-month to 1.92 MT in April going by Chinese import data. But, imports during January-April were up 4.4 per cent year-on-year.