Copper price climbs above $10,000/tonne as chances of PBOC policy tightening subsides

Revival in global economies amid stalled industrial activities in the virus struck nations boosted the demand for Chinese products in the overseas markets.

Mumbai / May 27, 2021 / 09:35 PM IST

Copper prices surged above $10,000/tonne on LME as bleak prospects of further monetary policy tightening by the PBOC supported market sentiments. The base metal recouped some of the recent losses on inventory deficit and dollar weakness.

The non-ferrous metal extended gains to trade at day’s high in the evening session on positive global cues.

Copper delivery for May climbed Rs 18.05, or 2.43 percent, to Rs 760 per kg at 20:52 hours with a business turnover of 63 lots. The same for the June contract jumped Rs 18.60, or 2.49 percent to Rs 764.75 per kg with a turnover of 4,386 lots.

The value of May and June’s contracts traded so far is Rs 3.55 crore and Rs 3,199.79 crore, respectively.

MCX METLDEX soared 365 points, or 2.47 percent, at 15,156 at 20:58. The index tracks the real-time performance of key base metals.

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Yash Sawant, Research Associate, Angel Broking Ltd said, “Industrial profits were weighed down despite rising Chinese exports in the similar time frame. Revival in global economies amid stalled industrial activities in the virus struck nations boosted the demand for Chinese products in the overseas markets. As per China's General Administration of Customs, Chinese exports in April’21 stood at $263.92 billion, 32.3 percent higher from the earlier month.”

However, the weakening of China’s industrial segment alleviated worries over further policy tightening by the People’s Bank of China (PBOC) which supported market sentiments, he added.

China’s Industrial profits witnessed a slow growth in April’21 following the strict power consumption norms and high commodity prices. Chinese Industrial firms’ profits stood at 768.63 billion yuan ($120.22 billion) in April’21, lower by 93 percent from the earlier month, data as per the National Bureau of Statistics (NBS).

Along with the energy consumption norms, impeded global supply chains ranging from shipping disruption, container shortage to increasing freight rates undermined the industrial segment.

The signs of improvement in the Sino-American relations overshadowed the recent shortcomings in China industrial sector.

The threat of a strike at BHP’s Escondida & Spence Copper mine as worker rejects company's offer. Spence produced 1,46,700 tonnes of Copper in 2020 while the world’s largest copper deposit, Escondida, produced 1.19 million tonnes in a similar time frame.

Worries over a potential strike come in line with a probable hike in mining taxes at major Copper producing nations like Chile & Peru. Disrupted supply in times of recovery in global demand might be supportive for Copper prices.

The US dollar traded flat at 90.02, up 0.00 percent in the evening session against the rival currencies.

Technicals

The non-ferrous metal has been trading higher than 5, 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 53.98, which indicates a neutral movement in prices.

At 15:42 (GMT), the reddish-brown metal price rose 2.66 percent to quote at $10,225.25 per tonne in London.

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Sandeep Sinha

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