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Copper heads toward fresh all-time high on bullish momentum, surges 2% to Rs 753.95/kg on MCX

Sentiment is likely to be positive in base metals, copper & nickel in particular due to rising Chinese demand, weaker US dollar and continued stimulus support.

Mumbai / May 01, 2021 / 06:30 PM IST
Copper

Copper

Copper jumped 2 percent this week to settle at Rs 753.95 per kg on the domestic bourse. Copper prices climbed for third successive week on improving demand outlook and upbeat economic data.

This has been a very positive week for copper as LME Copper touched $10,000 for the first time in a decade. All eyes are on a lifetime high of $10,190 on the LME.

The base metal jumped in three out of the five trading sessions on the MCX.

The non-ferrous metal has been trading higher than 20, 50, 100 and 200 days' moving averages but lower than the 5-day moving average on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 71.87 which indicates bullish movement in prices.

Further push came in on upbeat US data where the economy grew at a solid 6.4% y-o-y in Q1, with expectations that the current quarter will be even better.

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Germany's GDP shrunk by 1.7% for the quarter ending March 2021, slightly worse than the 1.5% fall expected.

Copper prices slipped after crossing the key psychological barrier of $10,000 per tonne on Thursday, as investors booked profits in subdued trading ahead of next week’s market holiday.

Yangshan copper premium fell to $43/tonne, its lowest since April 2017, indicating weakening demand for the imported metal into China and weighed on prices.

The red metal prices may seek support from signs of tightness in the physical market along with recent declines in on-warrant stocks at LME warehouses.

Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers said, “Sentiment is likely to be positive in base metals, copper & nickel in particular due to rising Chinese demand, weaker US dollar and continued stimulus support. We hold a positive view and recommend buy on dips in Copper & Nickel.”

The US dollar index ended higher at 91.28, up 0.77 percent on April 30 against the major cross. The dollar index had risen 0.49 percent this week.

MCX METLDEX increased 60 points, or 0.40 percent, to close at 15,151. The index tracks the real-time performance of key base metals.

In the futures market, copper for May delivery touched an intraday high of Rs 764.10 and a low of Rs 751.80 per kg on the MCX. So far in the current series, the base metal has touched a low of Rs 658 and a high of Rs 768.30.

Copper delivery for May slipped by Rs 3, or 0.4 percent, to settle at Rs 753.95 per kg with a business turnover of 3,582 lots. The same for the June contract eased by Rs 2.50, or 0.33 percent to Rs 756 per kg with a turnover of 142 lots.

The value of May and June’s contracts traded on Friday was Rs 2,947.49 crore and Rs 49.36 crore, respectively.

The red metal price settled with a loss of 0.49 percent at $9,809 per tonne in London.

Strategy for coming week

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

Strategy: For the upcoming week, MCX Copper is likely to continue its bullish momentum towards a new all-time high. Traders may go for a Buy-on-dips opportunity in MCX Copper from the downside support around Rs 748-747, keeping a stop loss at Rs 742 to chase the target at Rs 765.

Rationale: We attribute the rise in copper prices to a rise in participant bets, which was fueled by a surge in spot demand, which can be confirmed by a significant decrease in storage levels at London Metal Exchange. Copper prices rose 11 percent to $4.4565 in futures trade last month, owing to increased spot demand. Copper contracts for May delivery traded higher by Rs 88, or 13 percent, to Rs 753.95 per kg on the Multi Commodity Exchange, with more than 5000 lots traded.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Sinha

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