MCX Copper Short Term Tips: Copper rebounded from Wednesday’s slump, buoyed by expectations that demand will remain resilient in the face of possible tapering by the US Federal Reserve and China’s stepped-up efforts to jawbone prices lower.
Copper rose 0.4% to $10,038 a tonne Thursday morning on the London Metal Exchange, after climbing as much as 1.8%. Copper for delivery in July was up 0.3% on the Comex market in New York, with futures trading at $4.5550 per pound ($10,021 a tonne).
Sentiment improved with equities climbing and with a US report showing applications for state unemployment insurance fell last week to a fresh pandemic low.
A falling dollar also helped underpin gains in metals.
Copper prices fell almost 4% on Wednesday after China said it will strengthen its management of commodity supply and demand to curb any “unreasonable” increases in prices.
“For the time being, global commodity demand signals are still firing on all cylinders, with the recent weakening still consistent with noise,” TD Securities analysts led by Bart Melek said in a note. But “the context points to risks of normalizing growth.”
“When it comes to commodities, Chinese officials are between a rock and a hard place. A stabilization, or even a decline, in prices would require curbing demand,” said Frederic Neumann, co-head of Asian Economics Research at HSBC.
“On its own, expanding supply, either through increased production or the release of stockpiles, will likely have only a temporary impact in restraining price gains. The trouble with curbing demand, of course, is that it would harm economic growth.”
If supply remains inelastic, “you can’t suppress demand without hurting the economy,” ING senior commodity strategist Wenyu Yao said. “There’s no perfect solution.”
MCX Copper Short Term Tips
MCX Copper yesterday settled down by 1.1% at 752 as pressure seen after China’s refined copper production rose 16.6% year-on-year to 901,000 tonnes in April. However upside seen limited as a softer dollar and worries about a strike in Chile spurred purchases.
The union representing workers at Chile’s Escondida copper mine, the world’s largest, said it was preparing for a lengthy strike if owner BHP did not reach a “fair and equitable” deal in looming contract talks. Some support also seen is political uncertainty in top producer Chile and Peru.
- MCX Copper trading range for Today 737—752
- Copper prices dropped as pressure seen after China’s refined copper production rose 16.6% year-on-year to 901,000 tonnes in April.
- However upside seen limited as a softer dollar and worries about a strike in Chile spurred purchases.
- The world’s top metal consumer said it will strengthen its management of the supply and demand of commodities to curb “unreasonable” increases in prices.
An overhaul of Chile’s market-orientated constitution is underway and the country is debating whether to increase royalties on miners. Peru, the No. 2 producer, is heading for a polarized June presidential election with a little-known socialist leading in the polls who wants to redistribute mining wealth.
The world’s top metal consumer said it will strengthen its management of the supply and demand of commodities to curb “unreasonable” increases in prices and prevent them being passed on to consumers.
US Federal Reserve’s meeting minutes showed that some Fed officials were open to discussing debt purchase reduction in the “next few meetings”, and the interest rate market raised their expectations for interest rate hikes.
(With files from Reuters and Bloomberg)