Copper futures drop on lockdown concerns and firm dollar, further downside seen

Copper prices eased to Rs 613.55 per kg on January 11 as participants increased short position as seen by the open interest. The base metal traded in the red after a gap down open in the evening session on a stronger dollar.

The red metal had gained 4.56 percent last week on the MCX.

LME Copper prices eased from close to eight-year highs on Friday as doubts grow over how much infrastructure stimulus the incoming US administration will be able to deliver.

The base metal is witnessing profit-taking on lockdown measures imposed in some parts of the US and Europe and the latest lockdown being imposed in China to contain the coronavirus spread also weighed on the prices.

Hedge funds and money managers reduced their net long positions in copper futures and options by 1,240 contracts to 80,768 in the week to January 5, data from the US CFTC showed.

The US dollar traded firm at 90.45, up 0.43 percent in the evening session.

Neha Qureshi, Technical Research Analyst at Reliance Securities said, “LME Copper is trading on a negative note below $8,000 levels where it could see some consolidation in the coming session. Support is placed at $7940-$7880 levels whereas resistance is at $7995-$8035 levels.”

“MCX Copper January is trading on a bearish note below Rs 617 levels could see a downside pressure up to Rs 608-604 levels while resistance is at Rs 614.50-617 levels”, she said.

MCX iCOMDEX Base Metal Index dropped 143.67 points, or 1.04 percent, at 13,705.90 at 17:00.

In the futures market, copper for January delivery touched an intraday high of Rs 617 and a low of Rs 611.60 per kg on the MCX. So far in the current series, the base metal has touched a low of Rs 548 and a high of Rs 631.20.

Copper delivery for January slipped Rs 8.95, or 1.44 percent, to Rs 613.55 per kg at 17:01 hours with a business turnover of 4,032 lots. The same for the February contract declined Rs 8.60, or 1.38 percent to Rs 614.10 per kg with a turnover of 349 lots.

The value of January and February’s contracts traded so far is Rs 1,011.36 crore and Rs 48.08 crore, respectively.

MCX Copper price is expected to trade in a negative trend with resistance at Rs 618 level and intermediate resistance at Rs 616 level, said Motilal Oswal. The brokerage firm advised its clients to sell on rallies targeting lower support at Rs 611-609 zone.

At 1136 (GMT), the red metal price edged lower 1.22 percent quoting at $7,982.50 per tonne in London.

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