COPPER IS
LIKELY TO TRADE ON SIDEWAYS DURING MORNING SESSION
16-Mar-2012
Date: 16.03.2012
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Copper market is
expected to be in deficit mode in 2012 as per the major miner forecasts.
Meanwhile, Freeport McMoran Copper & Gold Inc, the major copper affirmed
that first-quarter copper output would be down by about 10% because of
labour-related problems at its Grasberg mine in Indonesia which will not
return to full production until the second quarter which inturn reassured the
supply tightening situation in the copper market.
Amidst the stronger
economic data from the US, the world's largest economy and supply tightening
in the copper market copper is likely to trade on sideways during the morning
session on Friday, 16th March. Copper is likely to find support at R 430 per kg and R 426
per kg and resistance at R 439.6 per kg and R 443.5 per kg.
Copper ended tad
higher on Thursday, 15th March at LME as the successful bond auction held in
France and Europe and the sanguine data from US boosted the sentiment. But
the concerns on the Chinese demand from property sector still lurked out in
the market and curbed huge gains in the metal.
LME Copper edged up
by 0.2% at $8479 per tonne on Thursday. Comex Copper buoyed by 1.3% or 5
cents at $3.8975 a pound compared to $3.848 a pound traded last day. MCX
Copper surged by 1.3% or R 5.6 at R 434.6 per kg. The contract stood above 9-day EMA and
RSI stood at 64.6.
The dollar index
shed by 0.4% at 80.25 against the basket of 6 major currencies amidst the
improved risk appetite but the still it hold onto the early January 2012
highs.
Metals ended mostly
lower yesterday amidst the concerns over the curbs in Chinese property sector
outweighed the market. But, the constructive economic data from the US
coupled with the successful bond auction held in Spain and France boosted the
sentiment during the session and curbed huge losses in the metals.
Chinese property
developers and many of the region's commodity producers declined amid worries
Beijing may not relax a policy aimed at cooling the nation's housing market.
Meanwhile, France
sold 8.46 billion euros ($11.05 billion) of notes, with borrowing costs
falling citing the ECB long term refinancing operation which favored
investors demand for the region debt. France sold 2.106 billion euros of
April 2014 notes at an average yield of 0.7 %, lower than the 1.14% on 15th
Sept. It sold 1.93 billion euros of October 2014 securities at a yield of
0.86% below the 2.01% it paid on 20th Jan. Spain sold 3 billion euros of
bonds, compared with a maximum target of 3.5 billion euros it set for the
sale.
In the economic
front, the sanguine data from US propped up the sentiment. The number of US
workers filing new applications for unemployment benefits fell more than
expected last week. In the week ending March 10, the advance figure for
seasonally adjusted initial claims was 351,000, a decrease of 14,000 from the
previous week's revised figure of 365,000.New claims are hovering at about
levels last seen four years ago.
Meanwhile, the
Federal Reserve Bank of Philadelphia's general economic index increased to 12.5
in March, in line with projections, from 10.2 in February.
United States
International Trade Commission ((ITC)) reported that United States copper
import declined sharply by 34% in January on y-o-y basis. US imported 37,822
tons of copper in January 2012, down 34.1% from 57,398 tons in January 2011.
Copper price rose at
LME and Comex during January and February 2012 but the trade deficit
situation in China for the month of February coupled with the sagging imports
in US during January 2012 might show a negative impact on the prices in the
near future.
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