Tag Archives: copper prices

Copper prices above Dollar 7,500/t is an opportunity to short: Barclays

18 May

The potential for further short-term dislocations in refined supply as a result of these factors. Lower global IP levels are contributing to the tightness in scrap, though low prices have also been a major factor, so even a brief period of price strength should help to ease some of the tightness.

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LONDON (Commodity Online): There is further upside to the recent short covering in copper given positive demand signals from China and market positioning that is still short. And prices above $7,500/t is an opportunity to short copper, said Barclays in a report.

Despite subdued macro news and data flow, micro copper related data signals from China remain positive, with the import arb still open, physical premiums high, SHFE time spreads in backwardation, bonded and SHFE stocks falling and end-demand indicators expanding.

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This should lend support to prices in the short term, though Chinese buying could start to run out of steam in July/August.

Despite strong growth in copper mine supply, refined supply has been lagging due to smelter disruptions and tight scrap supply.

Chinese smelters, which have become more reliant on scrap, recently announced up to 50Kt of production cuts as a result of scrap tightness.

The potential for further short-term dislocations in refined supply as a result of these factors. Lower global IP levels are contributing to the tightness in scrap, though low prices have also been a major factor, so even a brief period of price strength should help to ease some of the tightness.

“We have reduced the disruption allowance in our 2013 supply-demand balance by 0.5% to account for the loss from the Bingham Canyon landslide and the potential for lower disruption this year,” the bank noted.

“We would caution, however, that although copper supply is expected to be strong this year, the market is in danger of being complacent on this topic. Tighter scrap supply may to some extent offset strength in mine supply and lend support to prices, in our view,” Barclays concluded.

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Copper may reach above $7,500/t before re-stabilising shorts: Barclays

11 May

LONDON (Commodity Online): Copper prices may witness further upward movement as market positioning is still short with positive demand signals from China. The base metal prices may rise above $7,500 per ton before re-stabilising shorts, stated London based Barclays in its recent market report.

This week, across the base metals complex, short-covering dominated price dynamics. In the context of extreme CTA short positioning, a stronger-than-expected US employment report alongside a surge in German factory orders for March combined to act as catalysts to fuel the move in prices.

From a fundamental perspective, stock trends have been turning more positive. LME stocks have levelled out, SHFE and Chinese bonded stocks are falling.

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Other indicators of Chinese demand are also positive, physical premiums are high, SHFE time spreads are in backwardation, the import arb is still open and data on end-use activity in some sectors have continued to improve.

Interestingly, this rally has mainly been in copper, and to a lesser extent aluminium, reflecting the size of short positioning in those markets and also the more encouraging fundamental signals in the case of copper.

On the copper mine supply side, there were several developments of note over the past week.

–First, Rio Tinto stated that it expects final approvals from the Mongolian government to start shipments from its Oyu Tolgoi copper mine in the next few weeks. This follows protracted negotiations between the two parties that had raised concerns about the project time line. The mine is expected to produce 70Kt this year before ramping up to close to 200Kt by 2015.

–The Collahuasi mine’s production in Chile is expected to recover this year to potentially as high as 400Kt as mine worker announced their negotiations.

–Finally, Barrick Gold and Antofagasta announced they have given up on their Reko Diq copper-gold project in Pakistan.

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Source: Commodity Online