Copper price settled at a new all-time high in LME, COMEX and MCX supported fuelled speculators and industrial buyers on the back of healthy economic data as global economies revive from the pandemic.
The red metal ended the week with an increase of Rs 31.3 or 4.14 percent for a fourth straight weekly. Copper prices jumped in three out of the five trading sessions on the MCX.
Copper delivery for May rose by Rs 15.50, or 2.01 percent, to close at Rs 786.15 per kg with a business turnover of 4,749 lots. The same for the June contract advanced by Rs 15.15, or 1.96 percent to Rs 788.45 per kg with a volume of 427 lots.
The value of May and June’s contracts traded on Friday was Rs 4,398.66 crore and Rs 122.19 crore, respectively.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX Copper has traded in moderately bullish trend for the week. Copper future has formed a cup and handle chart pattern on the daily chart and the price has remained in quite bullish suggestion for the coming week.”
The US dollar index ended lower at 90.20, down 0.81 percent against a basket of six rival currencies. The dollar index ended with a loss of 1.15 percent during the week.
The global copper market should see a surplus of 79,000 tonnes this year and of 109,000 tonnes in 2022, the International Copper Study Group (ICSG) said.
However, many other market participants see another seriously undersupplied copper market this year contradicting the ICSG report, we have been witnessing that the prices have been factoring in the shortage over the last few weeks.
China’s imports of unwrought copper and products in April’21 stood at 484,890 tonnes, down from 552,317 tonnes reported in March’21. Copper arrivals in the world’s largest metal consuming nations dipped over 12 percent following the surge in red metal prices and slower expansion in their industrial segment.
The non-ferrous metal price settled with a gain of 2.96 percent at $10,410 per tonne in London.
Technicals
Sriram Iyer, Senior Research Analyst at Reliance Securities said, “Technically, LME Copper hit a 52wks high level at $10,368.75 level where prices have shifted to new range zone indicating a strong bullish trend up to $10,440-$10,600 levels while support is at $10,200-$9,980 levels.”
Domestically, MCX Copper May hit an All-time high level of Rs 783.80 levels and its trading on an uncharted territory where prices have shifted to a new range zone. Resistance is at Rs 792-800 levels whereas support is at Rs 771-758 levels.
Outlook
Iyer added, “Prices could continue to move higher, however, some profit-taking could not be ruled out as technically prices are extremely overbought. In the short term, there are no significant fundamental challenges that the markets are facing.”
“In the medium to longer-term horizon, fundamentally, the only major risk that the market could potentially face in a few weeks could be the withdrawal of easy monetary policy from China,” he noted.
Recommendation
"For the next week, traders should look for Buy on dips strategy in MCX Copper future wherein our view optimal range to enter in buy position should be around the psychological level of Rs 730, keeping a stop loss at Rs 725 and set the target of Rs 741.50," said Purohit.
Reliance Securities advises its clients to buy May copper futures near Rs 780 with a stop loss at Rs 776 and a target of Rs 790.
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