Copper prices slide below $9,100/tonne; correct over 15% from lifetime high

Copper prices resumed downward momentum and traded below $9,100/tonne on stronger dollar and China attempt to rein in raw material prices. The non-ferrous metal had corrected 7.29 percent last week on the MCX.

The base metal has fallen over 15 percent after hitting an all-time high of $10,746/tonne on May 10.

Copper delivery for June dropped Rs 2.10, or 0.30 percent, to Rs 691 per kg at 16:31 hours with a business turnover of 4,766 lots. The same for the July contract slumped by Rs 1.85, or 0.27 percent to Rs 696.20 per kg with a turnover of 1,622 lots.

The value of June and July’s contracts traded so far is Rs 1,112.10 crore and Rs 281.23 crore, respectively.

MCX METLDEX jumped 24 points, or 0.17 percent, at 14,445 at 16:33. The index tracks the real-time performance of key base metals.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Base metals prices traded mixed on Monday with most of the metals kept muted trading in the morning trade. Base metals traded under pressure on a stronger dollar and China crackdown fears. China announced a plan to sell state reserves of copper, aluminium and zinc, in an effort to curb a strong price rally in commodities.”

“Copper prices witnessed heavy selling in past week reporting the worst weekly fall since March 2020 as China announced to sell its reserves. The market players are cautious after FED’s hawkish stance with expectations of unwinding stimulus soon”, Patel noted.

Copper inventories in LME-registered warehouses rose by 24,925 tonnes to 168,675 tonnes, the highest level since April. Stockpiles in warehouses registered with the Shanghai Futures Exchange fell by 8,440 tonnes to 172,527 tonnes in the week to Friday.

China announced to release metals from its national reserves to nonferrous processing and manufacturing firms through a public auction weighed on Investor sentiments.

The US dollar eased to 92.04, down 0.18 percent in the evening session against the rival currencies. The shift in tone from the U.S. central bank also pushed the U.S. dollar towards its largest weekly gain since April 2020 and weighed on prices. 

Technicals

The non-ferrous metal has been trading lower than 5, 20, 50 and 100 days' moving averages but lower than the 200-day moving average on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 31.14, which indicates a bearish movement in prices.

At 1111 (GMT), the reddish-brown metal price tumbled 0.68 percent to quote at $9,083 per tonne in London.

Trading strategy

Patel expects base metals to trade sideways to down with MCX Copper June support lies at Rs 670 and resistance at Rs 710.