Domestic copper seen on the boil

LME prices touched an intra-day high of $7,500

Domestic copper could see a major spike tomorrow, with the spot prices on the London Metal Exchange shooting up by over 3 per cent to touch yet another intra-day high of $7500 a tonne.

Prices remained volatile amid illiquid trade during pre-market session but went up sharply on heavy buying by buyers in the US. The reason: lack of supplies owing to production disruptions in several copper mines and smelters around the world.

"Bank deposits are now being diverted into buying copper in view of the price potential," Surendra Mardia, senior vice president, Bombay Metal Exchange, said. Mardia said the price surge might continue.

"Fresh supply disruption possibilities cannot be avoided as workers at Falconbridge Ltd's Lomas Bayas mine in Chile have voted on a strike. This is pushing copper prices to new fresh highs. The planned production expansions have also fallen short of expectations," he added.

In its supply and demand forecast for copper, Macquarie Bank has estimated a supply deficit of 140,000 tonne for 2006. A new psychological barrier for the red metal also cannot be ruled out as Australia-based copper miner Anvil Mining has temporarily shut down its Kulu copper mine near Kolwezi in the Democratic Republic of Congo after one of its workers was killed in an uprising by illegal miners.

The other trigger for the price hike was the 10.2 per cent production shortfall at Armenian Copper Program during January to March.

During the period, the company processed 10,883 tonne of copper concentrate, which was 1.8 per cent less than a year ago. In the domestic physical market, virgin copper and scrap gained Rs 10 on guidance from the international market, and wire bar closed at Rs 390 per kg.

Copper armiture and utensil scrap closed the day at Rs 365 per kg and Rs 345 per kg, respectively.