Copper top gainer as prices rise globally

REVIEW/ BASE METALS

Copper was the biggest gainer in the non-ferrous metals market in Mumbai last week. Perhaps traders were maintaining their book position before proceeding on leave for Ganapati Pooja.

Copper wire bars, however, perked up marginally by Rs 5 to Rs 225 per kg towards the end of the week, leaving wide room for scrap to cover the position. Taking the initiative, heavy scrap and utensil scrap, therefore, positioned well and surged by Rs 8 and Rs 11 to Rs 205 per kg and Rs 182 per kg, respectively, on Friday.

The price movements in the domestic metals market are mainly governed by those in the international market. The current rise in copper prices is also said to be the impact of a similar uptrend in the international market, including London and Shanghai.

In Shanghai, copper futures rose to their highest in the last two weeks as declining stockpiles worldwide fuel concern that demand may exceed supply.

Copper stocks declined by 2,425 tonne (3.6 per cent) on September 2 to 65,525 metric tonne, the biggest daily decline since July 22. London Metal Exchange (LME) prices rose to a record on September 2 after the news spread like a wildfire. Prices in New York too reached a two-week high.

Concerned over a supply tightness, China has started investing hugely in copper, shifting its attention from aluminium and steel. The country is expanding its copper smelting capacity significantly.

A meeting was convened last week by leading Chinese copper smelters and the Beijing Research Institute of Mining to share ideas on how to go ahead with copper smelting expansion. The aim is to increase the metal's production to 3 million tonne per annum over the next five years - a rise of 50 per cent from that of the last year.

Copper for delivery in November rose as much as 410 yuan, or 1.2 per cent, to 35,240 yuan ($4,354) a metric tonne on the Shanghai Futures Exchange. That's the highest since August 17, when the most actively traded contract rose to a record of 35,270 yuan. It traded at 35,180 yuan early Friday morning.

Despite Hindalco's statement that Asia will face an aluminium deficit this year, the white metal managed to just follow the line of its red metal partner in the Mumbai market. Aluminium ingot went marginally up by Re 1 on Friday to Rs 102 per kg after getting no buyers' response earlier in the week.

Aluminium utensil scrap remained untraded at Rs 84 per kg. Lead disappointed analysts as no buyers were attracted towards it.

Nickel cathode, the silvery white metal, rose by Rs 10 to Rs 780 per kg over limited orders from its main users, i.e. stainless steel players. This is worth mentioning that since the stainless steel industry has started using minimum nickel percentage because of high price of this metal, the demand of nickel has declined.

Tin turned attractive as it declined by Rs 3 to Rs 415 per kg and repeated its history to be an independent direction taker.

Zinc rose by Rs 6 to Rs 85 per kg as galvanising industry placed their heavy orders. On the LME, the metal's prices climbed 4.7 per cent over the past week to 63 cents (US) a pound since a massive stock of the metal is in New Orleans warehouses and no one knows their status.

Of the 560,000 tonne of zinc in LME warehouses, 44 per cent, or roughly 250,000 tonne, is in warehouses in or around New Orleans. And as the information on these stocks may be unavailable for a while, prices would react accordingly.