Tag Archives: Copper Tips

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

Copper demand indicators for China turning positive: Barclays

4 May

High frequency end-demand indicators have started to pick up, the SHFE/LME import price arb has opened, SHFE stocks and bonded stocks have been falling, physical import premiums have been rising, and time spreads on the SHFE have gone into backwardation.

LONDON (Commodity Online): Whilst Barclays agrees that the demand environment remains soft for copper, there are signs that it is improving. All the usual copper demand indicators for China have been turning positive.

High frequency end-demand indicators have started to pick up, the SHFE/LME import price arb has opened, SHFE stocks and bonded stocks have been falling, physical import premiums have been rising, and time spreads on the SHFE have gone into backwardation.

“In our view, the sell-off may look overdone, but any price recovery is likely to be mild and difficult to sustain. We continue to favour selling into short-covering rallies in Q2,” said Barclays.

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In a move that may bring some much needed supply discipline in the aluminium market Alcoa has announced that it is considering closing 460Kt of production (11% of its capacity) in the next 15 months.

The company is reviewing higher cost plants given the weakness in prices. Alcoa confirmed that it already idled 568Ktpy in Texas, Tennessee, Italy, and Spain in 2012. Whilst this is a move in the right direction towards addressing the global surplus, it will not change the immediate supply-demand balance until cuts to production begin.

Barclays continues to see the market in >1Mt surplus this year, the seventh year of surplus with cuts so far doing little to address that. In China cuts of up to 700Kt have been largely offset by increased production in cheaper locations in the country leading to a still strong increase in net supply.

Negotiations of labour contracts at Freeport McMoRan’s 535Ktpy Grasberg copper mine in Indonesia get under way this month and already workers at three of its contractors have gone on strike.

Machinery repairs services workers at PT Jasti Pravita, PT Osato Seike and PT Srikandi Mitra Karya went on strike after failing to reach an agreement on a pay increase.

Freeport stated that “The strike for sure can slow down [Freeport Indonesia’s] operations, but we don’t expect any direct impact on our mining and production,” (Dow Jones). The last labour negotiations and resulting strike was in 2011 and lasted into 2012 resulting in 100Kt of lost production at the mine. We have been highlighting this year’s negotiations as a risk to this year’s copper production.

Source: http://www.commodityonline.com/news/copper-demand-indicators-for-china-turning-positive-barclays-54268-3-54269.html

Gold hovers near 19-month low; bargain buying on

17 Apr

Indian gold futures edged lower on Wednesday, near their lowest level in more than 19 months, on losses in the global markets and a stronger rupee, triggering bargain buying among physical traders.

The actively traded gold contract for June delivery on the Multi Commodity Exchange (MCX) was 181 rupees lower at 25,585 rupees per 10 grams.

US gold for June delivery was 0.37 percent lower at $1,382.2 an ounce. The rupee, which firmed in trade on Wednesday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

“There are many buyers after consolidation in prices … sales will rise for Akshaya Tritiya,” said SK Jain, vice-president of All India Sarafa Association.

India, the world’s biggest buyer of the yellow metal, will celebrate Akshaya Tritiya, a key gold buying festival, next month. The wedding season has also begun and will continue till early June.

India has been trying to curb imports to put a lid on the record-high current account deficit. The federal government raised the import duty on gold, which it called a dead investment, by 50 percent to 6 percent in January.

On April 2, Finance Minister P. Chidambaram suggested the government was unlikely to raise the import tax on gold further to avoid gold smuggling.

May silver was 592 rupees lower at Rs 42,603 per kilogram.

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Source: http://www.moneycontrol.com/news/commodities/gold-hovers-near-19-month-low-bargain-buying-on_854157.html

MCX Copper may trade bearish; support 405

3 Apr

“For intra-day, the commodity has support at 405 and below that it could test level of 403, said Amrita Mashar, Research Analyst at Commodity Online.

MUMBAI (Commodity Online): Copper futures for April delivery on India’s Multi Commodity Exchange (MCX) is likely to continue with its bearish trend on weak global cues.

“For intra-day, the commodity has support at 405 and below that it could test level of 403, said Amrita Mashar, Research Analyst at Commodity Online.

The base metal has resistance at 408 above which it may test 410,” she noted.

“MCX copper is likely continue with its bearish trend till it closes above 415 mark on a daily basis,” she said.

MCX copper for April delivery was down by 0.58 percent at Rs.406.20 per kilogram as of 03.38 PM IST on Wednesday.

The futures stayed in a thin trading range of 405-408 for the last two trading sessions. The base metal has dropped in the morning session after disappointing US and Chinese manufacturing data which raised concerns over the strength of the global economic recovery.

Investors are cautiously looking at Friday’s highly-anticipated U.S. monthly jobs report to asses the health of world’s largest economy.

U.S. ISM non-manufacturing data is scheduled to be released at 12.00 GMT.

Comex copper futures for May delivery was down by 0.60 percent at $3.358 per pound as of 03.51 PM IST on Wednesday.

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Source: commodityonline.com