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China Copper Prices May Witness New Lows in Q4 2013: Barclays

29 Jun

“Our economists have cautioned that implementation of the new government’s agenda of no stimulus, deleveraging and structural reform means there is an increasing downside that China could experience a temporary hard landing in the next three years,” the bank noted.

copper updatesLONDON : Copper prices in China may witness new lows in the fourth quarter of this year on rising copper mine supply, recent liquidity tightening and lower base metals consumption, stated London based Barclays in its recent market analysis.

“Our economists have cautioned that implementation of the new government’s agenda of no stimulus, deleveraging and structural reform means there is an increasing downside that China could experience a temporary hard landing in the next three years,” the bank noted.

In the first quarter of 2013, world copper consumption is estimated to have declined by around 5.3% compared with that in the same period of 2012, according to International Copper Study Group (ICSG). Chinese apparent demand declined by 10% owing to a 46% decline in net imports of refined copper.

Excluding China, year-on-year world copper usage declined by around 1.7%. On a regional basis, usage is estimated to have declined by 7.8% in Africa, 1.8% in the Americas, 7.6% in Asia, 0.2% in Europe, and 14.3% in Oceania.

World mine production is estimated to have increased by almost 11% in the first three months of 2013 year-on-year basis mainly owing to a recovery in production levels from constrained output in early 2012.

Meanwhile, according to ICSG projections for 2013, the global copper market is expected to have a production surplus relative to demand.

World production of refined copper is expected to exceed demand for refined copper by about 415,000 t, as demand will lag behind the growth in production. For 2014, although a recovery in usage is anticipated, a higher surplus is expected with increased output from new and existing mines.

Freeport McMoRan has restarted open pit production at its Grasberg mine in Indonesia, and the company expects underground mining to resume shortly. Furthermore, the labour contract negotiations have yet to be restarted, a process that poses a further risk of disruptions, according to Barclays view.

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China tight manufacturing, interest rates drag Copper down

20 Jun

Rise in interbank rates in Chinese markets to 12% gives out the impression that China is hitting on momentum brakes and provides for assumptions that the economy there is undergoing a deliberate slow down.

MUMBAI: With Chinese manufacturing shrinking at enhanced speed this month as reflected in HSBC-Markit PMI readings, questions are raised on the future prospects of copper.

The PMI reading came at 48.3 well below the 50 mark that separates expansion from contraction; of course, below-50 readings are indicative of contraction in the economy.

This, coupled with rise in interbank rates in Chinese markets to 12% gives out the impression that China is hitting on momentum brakes and provides for assumptions that the economy there is undergoing a deliberate slow down.

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The rates climbed as the central bank of China “refrained from using reverse-repurchase agreements to inject cash into the financial system,” as per Bloomberg.

“If market rates remain at such high levels, the only scenario for the Chinese economy is a hard landing,” said Xu Gao, chief economist with Everbright Securities Co. in Beijing to Bloomberg.

“That possibility is growing now — it seems the leadership is deliberately taking a wait-and-see stance to see how low China growth can be,” he noted.

Meanwhile, Barclays in a report said that, “copper dominated by construction and infrastructure spending may be seeing a shift to permanently slower demand growth.”

“Sentiment among traders in China has shifted from short-term bullish to cautious on copper. On the one hand, refined supply remains tight in China due to smelter maintenance and scrap shortage, and physical premiums remained at elevated for domestic spot market and bonded warehouse stocks. On the other hand, LME prices fell sharply on bearish macro developments and failed to rally on supply disruptions which is viewed as a negative for future price action,” Barclays report added.

On the Comex, copper for delivery on July 13 was seen trading at $3.098 a pound, a loss of $0.041 or 1.31% as of 10.33 AM IST.

On the MCX, copper for delivery on June was seen trading down by 0.12% at Rs.407.85 as of 10.33AM IST.

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.

copper updates

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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Here are trading tips for crude, nickel, copper & zinc

22 Apr

Renisha Chainani of Edelweiss recommends selling nickel on MCX at Rs 830 per kilogram. “Maintain a stop loss for this trade at Rs 845 per kilogram for a target of Rs 810-800 per kilogram”, Chainani adds.

Ram Pitre of Anand Rathi Commodities advises selling MCX crude at Rs 4,800-4,820 per barrel for a target of Rs 4,760-4,730 per barrel with a stop loss at Rs 4,850 per barrel.

Sumeet Bagadia of Destimoney Commodities advocates buying MCX zinc at Rs 99.50-100 per kilogram levels. Bagadia says, “Keep a stop loss for this trade at Rs 98 per kilogram for an initial target is of Rs 102.50 per kilogram followed by Rs 104 per kilogram”.

Dharmesh Bhatia of Kotak Commodities suggests selling MCX copper on rise up to Rs 379 per kilogram. Place a stop loss for this trade at Rs 383 per kilogram for a target of Rs 371-368 per kilogram.

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Source: http://www.moneycontrol.com/news/commodities/heretrading-tips-for-crude-nickel-copperzinc_856523.html

MCX Copper and Cardamom future rise in global cause

8 Apr

MCX Copper and Cardamom future rise in global cause

Copper– At the Multi Commodity Exchange, copper for delivery in April traded higher by Rs 2.05, or 0.51 per cent, to Rs 407.70 per kg in business turnover of 5,435 lots.

Cardamom– At the Multi Commodity Exchange cardamom for delivery in May rose by Rs 2.10, or 0.24 per cent, to Rs 894.20 per kg in business turnover of 130 lots.

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Source: http://moneymakerresearch.wordpress.com/

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