Current Copper Prices in India: Blowing Hot and Cold

After holding on to a slightly upward trend, copper spot and futures prices in Indian markets behaved like a yo-yo in the last few days of September and in the opening days of October.

The trend could end up heavily influencing buying and selling points in the copper futures market for November if there are no clear-cut global cues soon, said traders.

On Sept. 28, led by the firming in global trends, at India’s Multi Commodity Exchange (MCX), copper for delivery in November had gone up by about US $0.021 (Rs 1.15), or 0.26 percent, to US $ 8.42 (Rs 441.20) per kilogram, with a business turnover of 27,937 lots.

But on Oct 1., in line with a weak global trend, copper prices had moved down by as much as $0.06 (Rs 3.35) to $ 8.35 (Rs 437.70) per kg in futures trade as speculators offloaded their positions.

For the short term, between the first and second weeks of October, analysts here see copper buoying back to its previous happy state. One of the reasons for that is the firming up of the Indian rupee against the US dollar. Of course, analysts continue to maintain a bullish outlook on this metal for the long term.

The downward trend seen in the last few days was due to Indian copper mirroring the price movements on the London Metals Exchange (LME). London copper came down on Oct. 1 primarily because of two reasons – China’s manufacturing sector was still not looking up, while there were reports around a possible bailout for Spain’s over-stressed banks. In the previous week, too, on the LME, copper prices had fallen from the previous week’s four-month high.

Personal finance advisory firm also seemed to agree with global copper analysts. It said in a report that copper futures had declined at India’s MCX in the wake of weak global cues since the commodity was under pressure due to a report of China’s declining industrial profits. Also, weak demand has led to a surge in copper stockpiles at the LME.

Brokering firm Kotak Commodities Services in its outlook on base metals had forecast that support for November copper would be at $8.32 (Rs 436) at the start of October. Gains could remain capped amidst fears of weak demand persisting because of a bleak global outlook.

Like their LME counterparts, traders at the MCX are looking at some signs of an economic stimulus and planned infrastructure investments in the US, Europe and China, which they say would mean more orders for the metal. Until that happens, copper prices here are bound to remain range-bound.

Meanwhile, reports that mining company BHP Billiton had projected an annual growth of 10 percent for its copper production until 2015 had infused some confidence in the investors’ market. The company has based its forecast for the copper market on increasing demand from emerging markets such as China and India because of heavy use of the metal in construction and infrastructure, applications in the electrical and power industries as well as demand from consumables, urbanization and replacement.

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