Copper prices up Rs 1300

Decline in production world over, rise on LME seen as triggers

Hindustan Copper raised copper provisional selling prices by Rs 1,300 a tonne across all categories effective from March 1. With this hike, copper wire bar 8 mm is quoting at Rs 2,47,500 a tonne, while wire bar in the 11-16 mm range is selling at Rs 2,49,400 a tonne.

Copper cc rod non-standard, cathode full, cathode cut and wire bar full are priced at Rs 2,47,000, Rs 2,41,800, Rs 2,43,200 and Rs 2,49,600 a tonne, respectively.

The final prices for February for all copper varieties settled higher with cc rod 8 mm at Rs 2,65,322 a tonne against Rs 2,53,217 a tonne in the last month, cc rod in the 11-16 mm range at Rs 2,67,356 a tonne (Rs 2,55,256) and cc rod non-standard at Rs 2,64,822 a tonne (Rs 252,717).

Cathode full and cut prices rose to Rs 2,60,236 a tonne (Rs 2,48,122) and Rs 2,61,736 a tonne (Rs 2,49,622), respectively, while wire bar full jumped to Rs 2,68,627 a tonne (Rs 2,56,530).

The public sector integrated copper producer revises its product prices on a monthly basis depending upon the price movement on the London Metal Exchange (LME).

Copper prices on the LME remained volatile last month owing to rising inventory, resulting from the implementation of several expansion plans the world over, on one hand, and the rising demand from the international market checking a possible downward movement, on the other.

The company usually offsets its risk by announcing the final prices at the end of every month so that any volatility in the prices would not be able to affect the overall revenue rollover of the company.

Despite huge capacity expansion by its private peers like Sterlite and Birla Copper, the state-run Hindustan Copper remained silent on this front. In fact, its production capacity has nose-dived, to almost half at 13,000 tonne a year, from about 24,000 tonne a year a few years ago.

With the government announcing a customs duty cut on non-ferrous metals to 7.5 per cent from 10 per cent earlier, copper is expected to remain firm in the domestic markets.

Although fundamentals like lower premia, rising supplies and signs of a price rally are weakening, there are still some compelling reasons to remain bullish on the copper outlook.

With considerable risks, the supply side is set to underperform again. Producers are facing hurdles such as increased costs, labour shortages and wage contract negotiations, noted a report by Standard Bank of London.

The report also stated that the market is finely balanced with volatility ahead, as bulls and bears fight it out. "However, as the year unfolds the bears should ultimately win out," it said.

In another recent report, Barclays Capital said strong demand from the Chinese consumers is expected to help keep global copper prices on the boil. A survey of about 75 Chinese copper consumers revealed that the copper prices would remain firm in the near future.

Keeping in line with what has been highlighted above, Chile reported a fall of 2.9 per cent in its copper production at 4,18,929 tonne in January, from 4,31,364 tonne in the same month last year.