Copper hits record high

Virgin copper and scrap soared by 5 per cent, or Rs 20 a kg, to a new high in the Mumbai non-ferrous metals market on Friday tracking trends seen in international markets. Copper wire bar closed at Rs 405 a kg, gaining Rs 12 over the previous day, and Rs 107 in the last one month.

Copper heavy scrap, however, surpassed all predictions and closed at Rs 390 a kg, gaining Rs 18 from the previous day and Rs 110 in the last month. Copper light scraps, copper utensil scrap and copper sheet cutting also made similar gains to reach Rs 375 a kg, Rs 345 and Rs 368 respectively.

The domestic copper markets are guided by the London Metal Exchange where base metals prices are surging towards historical highs.

In London, the red metal gained $250 on Friday to close at $7,805 a tonne, up 44 per cent in the last one month. Analysts set the next resistance at $8,000.

Experts are divided on copper prices in the international market. BHP Billiton, the world's largest diversified mining group, expects the price of the red metal to remain high.

Higher cost of input has forced about 60 per cent small and medium scale units to shut down operations across the country. They failed to meet the commitment of delivery as the red metal price at the time of delivering the products was much higher than that of buying raw materials, thus bringing huge losses to users.

Currently stocks in the country are so low that it is equivalent to just one day's world consumption. This means that if the stockists start building their inventory then the availability of metal would become a major problem, an analyst said.

Optimistic analysts' hope the market would move into surplus later this year or in 2007.

Surendra Mardia, senior vice-president, Bombay Metal Exchange, said, "Copper prices are on continuous upward momentum which is supported by strong fundamentals, rising demand and huge funds diversion from other sectors to copper."

He however, said the "bubble" could burst any moment as the metal has crossed sustainable levels, Mardia said.

"Fresh supply disruption possibilities can not be avoided as workers at Falconbridge's Lomas Bayas mine in Chile have voted on strike action which are pulling copper prices to new highs," another trader said.

Planned production expansions have also fallen short of expectations, adding to positive sentiments for the copper market, another trader said.

The London Metal Exchange has doubled margin for copper in order to curb exorbitant price rise which experts believe will control prices to a certain extent.