|
| Copper may rise on Chinese demand |
| Dilip Kumar Jha / Mumbai Apr 12, 2009, 00:30 IST |
|
 Firm Chinese demand may push up copper prices in the coming week as the procurement agency in that country may take advantage of the current low prices to build the metal’s stockpile needed for the 4-trillion-yuan ($585 billion) stimulus programme.
In recent months, China has resumed stockpiling base metals to meet its infrastructure demand, giving a boost to prices globally. According to reports, the country’s investment spending climbed 26.5 per cent in the first two months (January-February) as it poured money into infrastructure projects such as roads, railways and power to counter global recession. These are high metal consuming sectors.
Import of copper and copper products into China soared in March as the State Reserve Bureau of China raised inventories. Scrap imports in the country were recorded at 330,000 tonnes in March compared with 539,733 tonnes in the same period last year. Import of aluminum and aluminium products more than doubled to 147,181 tonnes in March compared with the same month last year.
The country’s refined copper purchases may jump 37 per cent to 2 million tonnes this year as per estimates.
After hitting a lifetime high of $8,800 per tonne in early 2008, copper plunged to the $3,000 level towards the close of the year, but has recovered to $4,465 this year. In the first quarter of 2009, base metals witnessed mixed performance. Copper led the pack gaining over 30 per cent, supported mainly by Chinese buying. Copper inventories during this period gained sharply by over 49 per cent. But the prices have not declined on State Reserve Bureau buying.
“Copper prices could rise in the short term, but the gain may not be sustainable as demand from the industrial segment in China is still low,” said an Angel Broking report.
This week base metals ended on a positive note as buoyant equity markets and expectations of continued buying in China coupled with short covering helped provide strong support. Copper led the way and other base metals followed suit despite weak individual fundamentals.
The price rise in aluminum is not justified as the metal is fighting against weak demand and a sharp rise in LME inventories. Nickel too faces weak fundamentals as demand from the stainless steel sector is low and is not expected to pick up in the short term. Though base metals gained sharply on the LME last week, gains on the MCX were limited because of the rupee factor. The Indian currency has appreciated almost 3.5 per cent in the last five weeks limiting the upside in base metals prices, the report added.
Copper jumped 3 per cent this week to $4,465, translating into a gain of 6 per cent to Rs 306 per kg on the MCX.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
Content Guide
