High LME copper prices push up local wire bar tag

Spiralling copper prices in the international market pushed up wire bar prices by Rs 1,200 to Rs 26,700 a quintal in the domestic markets, in just a week. Meanwhile, the copper scrap prices, too, moved up on supply shortage in the local markets.

Copper heavy scrap gained Rs 1,500 to Rs 24,500 a quintal, while light scrap surged by Rs 1,800 to Rs 23,900 a quintal. Copper utensil scrap and sheet cutting, on the other hand, climbed by Rs 1,550 and Rs 1,650 to Rs 22,100 a quintal and Rs 23,500 a quintal, respectively.

Surprisingly, there was no major movement in other metals, as aluminium ingots and utensil scrap advanced marginally - by only Re 1 and Re 0.50 - to Rs 11,100 a quintal and Rs 8,850 a quintal, respectively.

The prices of lead and zinc also moved up last week to Rs 6,000 a quintal (from Rs 5,900) and Rs 12,200 a quintal (Rs 11,850), while tin gained Rs 1,000 to Rs 39,500 a quintal.

Investment funds moved from copper and aluminium to nickel last week, especially from large industrialised nations. Therefore, nickel price managed to appreciate by Rs 5,800 to close at Rs 75,000 a quintal. "Copper prices are ballooning up, but it may burst anytime," said Rohit Shah, president, Bombay Metal Exchange.

Investors are looking at booking maximum profits at the current high prices and, therefore, Indian traders are applying caution in their business. Today, copper trades have become need-based rather than interest-based. So, traders are buying only according to their requirement, he added.

With the copper prices crossed $3,500 in the international market, trade slowed down quite a bit. Traders are now preferring to adopt a wait and watch approach till the time a clear message emanates from the international communities.

"Western companies will be finalising their books of accounts in the last week of December, and on the basis of their profit-loss earninigs they may draw up their investment plans for the next year. So, the bullish sentiment, seen currently, will prevail till sufficient reasons change the course," said Shah.

Further, Shah cautioned that a correction towards the end of the month or the beginning of the next in the range of $500-600 could not be ruled out at this stage.

The Bombay Metal Exchange vice-president Surendra Mardia, too, is optimistic. He opined that the bullish sentiment would continue.

A section of market observers claims that the copper prices are heating up just because of artificial demand created by certain groups with vested interests.

International companies, which are preparing their balance sheets, may liquidate some funds if their book positions for the current year are favourable.

Again, the industry may see investments drying up if book positions do not turn good. Hence, the position for the metal industry would be clear only in the first week of January 2006, said Mardia.

The domestic markets are in short supply of copper scrap; imports of scrap have come down by about 30-35 per cent owing to rising virgin metal prices and also because the period between a booking and the corresponding delivery at any local market is still quite long.