Continued from Part One.
The fact that economic growth in India has slowed to its weakest in nearly a decade is worrisome news for copper dealers here, and some feel that the bad news could negate the past few days of copper’s price gains.
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A few days prior to Monday’s industrial output figures, media reports here quoting a report by research agency ICRA had said that while the near-term demand outlook for copper looked weak, supply constraints globally were expected to provide support to prices.
For the medium term, copper prices may moderate gradually on the back of expected capacity additions, with the pace of consumption growth depending primarily on the recovery in the macroeconomic environment, especially in China.
But judging by the trend of the last two days of trading on the MCX, it looks that maybe the market had decided to discount the negative growth sentiments.
A Press Trust of India (PTI) report noted that amid a firm global trend and increased domestic demand, copper prices gained 0.78 percent to roughly US $7.63 (Rs 419.45) per kilogram in futures trading on Monday, as speculators increased positions.
On the MCX, copper for delivery in February edged up by 0.72 percent to about US $7.74 (Rs 425.90) per kilogram, with a business turnover of 1,917 lots.
On Tuesday, market sentiments on the MCX continued to remain positive with November copper trading in the region of US $7.67 (about Rs 422).
Traders on the MCX said the disappointing news from India may have been tempered by the firm global trend as copper rebounded from a 10-week low as stronger-than-expected growth in total exports from China outweighed concerns over a drop in imports of the metal.
Increased demand from end-use industries in the spot market was also supporting the uptrend in copper, they added. The MCX trend was a reflection of a similarly positive one for copper futures on the LME.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.