Copper in recovery mode, aluminium trading flat
Base metals trading in divergent ways on mixed fundamentals; Overall demand outlook for base metals globally looks grim as central banks around the world tightened their monetary policy to curb rising inflation
image for illustrative purpose
Hyderabad: Futures of base metals- copper and aluminium- were trading in flat to recovery range for the past few weeks. Copper prices are expected to move up, while aluminum prices may decline further from the resistance level.
“The overall demand outlook for base metals globally remained grim, as central banks around the world tightened their monetary policy to curb rising inflation. Worries over global economic growth further clouded metals' demand, outweighing supply concerns spurred by production cuts in Europe. Concerns over subdued demand from China following the end to Covid-19 restrictions keep weighing on the metals complex,” Ravinder Kumar, research associate (commodities technical), SMC Global Securities Ltd, told Bizz Buzz.
Copper futures (1kg unit) with April 28 expiry was trading 16.06 per cent higher at Rs782.55 on April 3, 2023, as against its three-month low of Rs674.25 on December 26, 2022, on MCX. Copper futures were trading above Rs700 this year so far.
Dilip Nath, senior associate at SMC Global Securities Ltd, said: “Copper futures at the MCX platform settled lower at Rs752.65 on the previous week from the previous closing price of Rs756.65. The prices have been well sustained above the weekly trend line resistance of Rs745. Now, the immediate resistance is seen around Rs791. If the price will sustain above Rs791 level, it can continue to move upside towards Rs815/840. If the price has failed to sustain above the resistance of Rs791, then we can see again the down side move towards Rs740/715 again. Overall the commodity is expected to move higher from its support levels.”
Aluminium futures (1kg unit) touched low of Rs207.10 on January 5 and started recovering to Rs231.75 on January 24. However, it failed to sustain the moment and fell to year's low of Rs204.05 March 16 and hovering at Rs212 as on April 3.
“Aluminium futures at the MCX platform settled lower at Rs204.30 on last week. From September 2022 to February 2023, prices have been traded in a Rs185-230 range. Now, the prices have been trading below the 22-day moving averages of 210.50. The short-term immediate resistance is seen around Rs215, sustainable trade above Rs215 can see the upside move towards Rs230/245 and if it breaks the support line of Rs202, then it can see the downside move towards Rs187/172 respectively. Overall the commodity is expected to move lower from its resistance levels. Thus we recommend selling at its higher levels in the current month,” forecasts Dilip Nath.
Industrial metals traded lower in February and picked up in March. Copper prices posted their first monthly drop weighed down by a firmer US dollar and as demand from top consumer China remained subdued. Dollar remained firm after a fresh set of data indicated the Federal Reserve will keep interest rates higher for longer, and concerns grew the United States may impose more sanctions on China.
Meanwhile, concerns about global supply eased. The Panamanian government and Canada’s First Quantum are nearing an agreement on their negotiations over the contract to operate a major copper mine. Global copper smelting activity declined in February despite a further rebound in activity in top refined metal producer China, data from satellite surveillance of metal processing plants showed. However, the prices got some support on hopes that Chinese demand would rebound after the country abandoned Covid-19 controls, according to a report by SMC Global Securities Ltd. In China, signs of improving copper demand have emerged. SHFE copper inventories declined for the second straight week to hit their lowest since January 20 by the end of last week, while the premium for domestic copper climbed to 95 yuan a tonne on March 10, 2023, the highest since January 16. Shanghai Metal Market (SMM) News said the supply of lead concentrates in 2023 is expected to increase with the pandemic subsiding and the commissioning of other mining projects that also contain lead ore. Global demand for the refined lead metal is expected to exceed supply by 42,000 tonnes this year.
Australian mining firm Rio Tinto Ltd said it commenced underground production at its Oyu Tolgoi copper mine in Mongolia. The mine is expected to produce around 500,000 tonnes of copper per year, on average, from 2028 to 2036.
