Copper prices surged to a fresh lifetime high of Rs 725.80 per kg on the MCX during the intraday session on February 23 amid hopes of a reflation of the US economy from President Joe Biden’s upcoming $1.9 trillion COVID-19 stimulus.
The base metal had a positive start to the week, with some profit-taking during the day, but it still managed to keep copper close to $9,000 a tonne – highest in nine years.
Copper pared gains after a gap-up open in the evening session, tracking global cues and a stronger dollar.
The base metal is getting support from upbeat macros as well as fundamental factors. Copper inventory at London Metal Exchange (LME) decreased slightly indicating prices may rise, strengthening the bull move.
“Low LME inventory levels, recovering global industrial demand, restrained supply and a weaker dollar is fueling perceptions that Copper is in the throes of a supercycle/reflation cycle. With LME backwardation widening, shorts that have hedged physical units must be covering their positions since they simply cannot sustain the interim margin calls. Short-covering by them, as well as the lack of forward selling by others, is likely further contributing to the run-up”, said Hitesh Jain, Lead Analyst – Institutional Equities, Yes Securities.
The US dollar traded higher at 90.18 or up 0.21 percent in the evening session.
MCX iCOMDEX Base Metal Index was down 134.12 points, or 0.89 percent, at 14,987.12 at 18:51.
In the futures market, copper for February delivery touched an intraday high of Rs 725.80 and a low of Rs 708 per kg on the MCX. So far in the current series, the base metal has touched a low of Rs 585 and a high of Rs 725.80.
Copper delivery for February slipped Rs 1.95, or 0.27 percent, to Rs 710.50 per kg at 18:52 hours with a business turnover of 471 lots. The same for March contract eased Rs 1.20, or 1.04 percent to Rs 697.50 per kg with a turnover of 5,671 lots.
The value of February and March’s contracts traded so far is Rs 41.85 crore and Rs 3,685.55 crore, respectively.
Neha Qureshi, Technical Research Analyst at Reliance Securities said, “LME Copper hit a 52-week high at $9,304.25 level where it is trading near $9,100 levels, indicating sideways momentum in the range of $9,020-$9,233 levels. MCX Copper March hit a high at Rs 711 levels from where it has seen correction below Rs 700 levels, suggesting sideways to marginal downside momentum up to Rs 693-Rs 689 levels, whereas resistance is at Rs 701-Rs 703 levels.”
She advised her clients to sell March Copper at Rs 700-Rs 701 with a stop loss of Rs 704 and for a target of Rs 693.
At 13:28 (GMT), the red metal price was slightly up 0.11 percent, quoting at $9,124 per tonne in London.
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