After a lackluster performance in October, and a lot of negativity before that, copper prices, in keeping with some earlier predictions, have started showing a moderate increase.
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On Nov. 9, for example, amid pickup in domestic demand and a firm global trend, copper prices (November contract) traded higher by 0.13 percent to about US $7.50 (Rs 417.40) per kilogram in futures trades, at the Multi Commodity Exchange (MCX).
But new industrial and trade figures released by the Indian government on Monday for September 2012 could put a brake on this positive sentiment, though initial trading, post-report, showed the market may have discounted any negative sentiment.
Market analysts attributed the rise in copper futures prices to the firming of the global trend following reports of manufacturing activity in China having picked up in October — and that of the US, too. Copper for delivery in three months at the London Metal Exchange (LME) in the first few days of November also showed an overall positive trend.
Many fear the unexpectedly poor performance by Indian industry could prove to be the thing that ruins the party. According to a report in the Wall Street Journal, India’s industrial output unexpectedly shrank in September, while its trade deficit in October widened to the largest ever seen in several years. This, according to the report, was a clear indicator that despite claims being made to the contrary, the Indian economy was still floundering.
The new government data showed that the country’s industrial output had contracted 0.4 percent from a year earlier in September, hurt by the poor performance of the manufacturing sector. The government also downwardly revised the output reading for August to a 2.3 percent expansion from 2.7 percent reported previously.
Factory output in India had shrunk in five of the seven months through September, as high interest rates ate into demand. One report said economic growth in India had slowed to its weakest in nearly a decade.
Continued in Part Two.
Image source: Wall Street Journal
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.