COPPER IS LIKELY TO TRADE WITH NEGATIVE MOMENTUM DURING THE MORNING SESSION (APRIL 10)

COPPER IS LIKELY TO TRADE WITH NEGATIVE MOMENTUM DURING THE

MORNING SESSION

Date: 10/04/2012

Copper is likely to trade with negative momentum during the morning session on Tuesday, 10th April after a thin trading a day before on eve of Easter. The trade surplus in China that shown a rise in exports and fall in imports reflecting a weak demand might add to the gloomy environment of rise in Chinese inflation that released a day before and dampen the sentiment. Copper is likely to find support at Rs 419.5 per kg and Rs 416 per kg and resistance at Rs 426.6 per kg and Rs 429 per kg.

China returned to a trade surplus in March but growth in exports and imports fell sharply amid weak demand. Chinese customs reported that export growth declined to 8.9%, less than half of Februarys growth rate. Import growth fell to 5.3% from the previous months explosive 39.6% expansion.

Chinese export industries have been hurt by U.S. and European economic problems that are cooling global demand. Imports also have weakened as Chinas relatively rapid economic growth slows. Chinas global trade surplus was $5.3 billion, a turnaround from Februarys rare monthly deficit of $31.5 billion.

Copper retreated on Monday, 9th April Comex and MCX in which copper breached the short term uptrend since mid February 2012. The acceleration in Chinese inflation added to the woes on bleak demand from China and hampered the metals.

Comex Copper slumped by 2% or 8 cents at $3.72 a pound compared to $3.7955 a pound traded last day. MCX Copper plummeted by 1.9% or Rs 8.25 at Rs 422.65 per kg and tested an intraday high at Rs 431.85 per kg and low at Rs 422 per kg amidst the huge short selling in the copper market.

Meanwhile, the slew of economic growth recovery signals from US were tempered by the bleak job payrolls data released during the last week and further dragged down the metals. This data was questioning the Feds effort to embark onto the further monetary easing measures.

The dollar index edged down by 0.1% at 79.77 against the basket of 6 major currencies as the thin trading amidst the Easter holiday in major economies such as UK, Europe and other countries led the safe haven to end on a flat note.

Chinas inflation accelerated more than forecast in March on a pickup in food prices, signaling that policy makers may exercise caution in adding stimulus to boost growth. Inflation in China increased more than expected to 3.6% in March after easing to a twenty-month low in February, as per the National Bureau of Statistics.

Nonfarm payrolls increased 120,000 in March, the Labor Department reported. The result snapped a three-month streak of 200,000-plus-job growth. Economists surveyed had expected, on average, an increase of 203,000. Meanwhile, the unemployment rate fell to 8.2% from Februarys 8.3%, beating expectations of an unchanged reading and making it the lowest rate since January 2009.

In industrial metals news, Hindustan Copper is planning to raise USD$ 250 million in the current quarter through overseas borrowings to part finance its expansion activities. It is expected to be get completed by the end of this quarter.

Alcoa, the global aluminium giant is due to report first-quarter earnings later today. The aluminum makers report signals the unofficial start of the corporate-earnings season.

Alcoa, a producer of primary and fabricated aluminum announced that it will reduce the yearly production potential of alumina by around 390,000 tonnes in order to fine tune the production with smelter curtailments.

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