Copper prices surge on supply fears

Wire bar, scrap prices gain Rs 200 and Rs 300, respectively

Copper wire bar gained Rs 200 to Rs 22,700 per quintal in Mumbai on Tuesday as cash buyers booked in huge quantity fearing supply constraints in future.

Copper wire scrap, utensil scrap and armiture have also gone up by Rs 300 to Rs 20,500 per quintal, Rs 19,500 per quintal and Rs 18,000 per quintal respectively.

"It is quite difficult to predict anything today as nobody knows which direction copper would go," said Surendra Mardia, senior vice-president, Bombay Metal Exchange.

"Yesterday, copper on the London Metal Exchange jumped $150 soon after opening and slashed again by the end. Today, it is rising once again. Copper has set a benchmark of $3950 which it would cross this time and set the new psychological barrier of $4000, if the current rising trend continues" Mardia added.

"China has already started buying lot of scrap today surprisingly, at any price. This is the new trend started in the current copper market. Once China comes into the picture, anything happens," Merdia said.

Copper scrap supply has been scarce throughout the world and India is no exception. India has been importing copper scrap through Sri Lanka under zero duty agreement signed by the two countries.

"There is no supply glut. Rather India is looking of more copper imports from various part of the world," Mardia said and added that scrap sellers were benefiting while users were suffering the most.

Domestic consumption and scarcity of availability would keep domestic copper prices rising, Mardia said.

Developments in the international market are also making much impact on domestic metal prices movement. The North American copper market is expected to remain tighter with "no end in sight" to labour talks at Asarco, and labour contract negotiations at Falconbridge's copper and zinc operation Kidd Creek, Ontario, approaching "crunch time".

On the Shanghai Futures Exchange, copper futures settled sharply higher, boosted by an overnight surge in LME copper futures.

The benchmark November 2005 contract gained CNY780 a metric tonne to settle at CNY35,000 per tonne, after trading between CNY34,900 per tonne and CNY35,400 per tonne.

December 2005 contract rose CNY810 per tonne to settle at CNY34,440 per tonne, after trading between CNY34,330 a tonne and CNY34,510 per tonne. Total trading volume climbed to 91,418 lots (5 tonne) from 82,324 lots on Monday.