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Copper price tumbles on weak demand prospect, firm dollar; gives negative breakout

MCX Copper has given a negative breakout from the rising trend line channel, price is expected to trade negatively, said Axis Securities.

Mumbai / June 03, 2021 / 07:27 PM IST
LME supplies for copper are in marginal surplus for the day which may fuel downward movement.

LME supplies for copper are in marginal surplus for the day which may fuel downward movement.

Copper prices trimmed gains and turned negative in the evening session, tracking weak global cues and strength in the dollar. The base metal has been trading marginally sideways and with bearish bias on signs of weakening demand in China.

Copper delivery for June declined Rs 18.45, or 2.43 percent, to Rs 740.70 per kg at 18:48 hours with a business turnover of 5,152 lots. The same for the July contract edged lower by Rs 17.85, or 2.34 percent to Rs 745.20 per kg with a turnover of 334 lots.

The value of June and July’s contracts traded so far is Rs 2,653.97 crore and Rs 54.39 crore, respectively.

MCX METLDEX dropped 294 points, or 1.92 percent, at 14,979 at 18:50. The index tracks the real-time performance of key base metals.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “Market declined from the resistance zone of Rs 766-Rs 773 in the previous session and tested the support of Rs 758-Rs 756 levels. We may expect the prices to breach the support levels and test Rs 750 on the downside in the evening session.”

Close

“Worries over potential shortage arising from major copper producer Chile eased after BHP stated that the operations at Escondida and Spence mine were normal despite the strike. The 200-member union walked off the job last week after failing to reach an agreement with BHP even after weeks of negotiations. The Global miner BHP subsequently called in substitute workers to keep the mine running”, Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd.

“As per Chile’s Copper commission Cochilco, Codelco copper mine's output stood at 132,700 tonnes in April’21 i.e. a drop in production by 0.5 percent (yoy) whereas BHP’S Escondida mine production stood at 85,700, a 16.5 percent fall in the similar time frame”, he added.

Money managers cut their net long position for a third straight week to 33,991 contracts in the week to May 25.

LME supplies for copper are in marginal surplus for the day which may fuel downward movement.

Investors awaited US Jobs data due tomorrow that will offer a glimpse of when monetary policy could tighten.

The US dollar rose to 90.28, up 0.42 percent in the evening session against the rival currencies. 

Technicals

The non-ferrous metal has been trading higher than 50, 100 and 200 days' moving averages but lower than the 5 and 20 days’ moving average on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 43.27, which indicates a bearish movement in prices.

At 13:31 (GMT), the reddish-brown metal price slumped 2.13 percent to quote at $9,896 per tonne in London.

Trading Ideas

MCX Copper has given a negative breakout from the rising trend line channel, price is expected to trade negatively, said Axis Securities.

Axis Securities Axis Securities

Sustaining below Rs 757 would drag down the price lower towards Rs 750-Rs 748 levels in intraday. The price has started trading below 9, 21 and 60 hourly EMA which is a bearish sign it said.

Motilal Oswal said initial pullback will be seen in MCX Copper, but overall bias remains weak as long as below Rs 760. Immediate resistance is at Rs 756 whereas support is at Rs 746.50-Rs 743.20 levels. It advised its clients to deploy sell on rise strategy for the day.
Sandeep Sinha

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