Japanese Recession Drags Down Indian Copper

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On November 18, copper futures rose 0.48% to about $6.64 (Rs 411.20) per kg amid positive cues from overseas markets and a pick-up in spot demand. The metal for delivery in February went up by 0.41%, at about $6.72 (Rs 416.80) in a volume of 27 lots.

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Globally, 3-month copper advanced by 0.20% to $6,646.25 a ton at the London Metal Exchange.

Indian copper mostly mirrors trends at the London Metal Exchange, and market analysts attributed the rise in copper prices in futures trade to a better trend on the LME coupled with the interest shown in the domestic spot markets.

But by end of Nov 19., prices eased at the local Indian non-ferrous metal market on slackened demand from consuming industries. Sentiment turned bearish after copper fell in global markets following Japan’s unexpected recession and also a decline in US industrial production.

Copper for delivery in 3 months fell less than 0.1% to $6,704 a metric ton at the LME, according to this report in the Business Standard.

So how will 2015 treat copper? On Tuesday, Moody’s Investors Service forecast a stable outlook for the global base metals industry. The report said copper, nickel and zinc were expected to trade within the price ranges seen this year over the next 12 to 18 months.

It said prices would remain vulnerable to influences such as global economic growth rates, Chinese export or import levels and production disruptions.

Another forecast by the Centre for Monitoring Indian Economy (CMIE) said refined copper production was expected to rise by 10.1% in 2014-15, after falling by 6% in 2013-14.

Demand in the Indian market in 2015, say many analysts, could see a growth, thanks to the Government’s decision to allow 100% Foreign Direct Investment in the construction sector, as well as fresh impetus given to India’s power sectors.

Copper analysts said the metal would move from deficit to surplus, and this could lead to further weakness in prices in 2014-16. LME copper prices could fall to $6,335 per ton in 2015.

Copper is expected to average $6,500 a ton during next year, according to a report by BNP Paribas. The latter still expects firm supply growth to keep the copper price under pressure well into 2015.

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.

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