Copper......
The
Copper prices recovery may be short lived considering heavy supplies
coming in the markets in few months time. The ageing Copper mines and
supply disruptions was the most critical factor that made Copper markets
to remain in deficits in last few years. The scenario has changed and
miners like BHP Billiton and Freeport McMoran etc have plans to increase
their production capacities. BHP Billiton is planning to set up a new
plant in Escondida to expand mining of ores. Taking this into account,
it is probable that Copper recoveries will be short lived whenever that
happens.
Another critical factor is the drop down in Chinese
imports. China consumes 40 percent of Copper in the world, decline in
imports by more than 30 percent as per the latest data indicates that
the Bull Run for Copper is over and prices are under clutches of bears.
Fund
managers have been increasing their shorts to record levels as per COT
report. Commitment of trader's weekly report highlighted tough days for
Copper. The report showed that fund managers continued to increase their
short positions. The total short positions gained by 7582 contracts
taking total short contracts number to 60302. Long contracts showed a
decline of 1382 contracts and were at 21302. Total net short positions
therefore moved up by 30% to 39000 contracts.
LME inventories were
at 587925 tonnes, up 85 percent in 2013. Shanghai inventories was at
241943 tonnes, up 18 percent in 2013. Indian Copper futures for April
expiry declined by 0.5 percent, after testing high of Rs 414.3 per kg.
The prices tested levels of Rs 412.5 per kg. LME Copper three month
prices are seen trading at $ 7565 per tonne, down $ 10 per tonne from
last night.
In economic news, Eurozone GDP is expected to
contract 0.3% this year which will further reduce the demand for Copper
and other metals. Dollar was trading at 1.3056 against Euro, up 10 pips.
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