The global copper market is broadly expected to move into a significant surplus next year, but supply typically falls short of estimates due to unforeseen events such as strikes and problems in mining for ever-deeper and hard-to-get ore deposits.<
Copper prices traded cautiously bullish amidst improving seasonal demand in China, softening of US dollar index and better than expected PMI data in Europe and China. Copper held steady as the dollar softened from recent highs, sliding to fresh multimonth lows after the European Central Bank's monthly meeting failed to inspire confidence about future growth, stoking fears about metals demand. Also helping sentiment was strong Chinese refined copper imports which jumped 23 per-cent month-on-month to 288,700 tonnes, soothing concerns about a slowdown in demand. China's economy is likely to have grown at its weakest pace in more than five years in the third quarter as a property downturn weighed on demand, raising the prospect of more aggressive policy steps that may include a cut in interest rates.
Copper edged up as hopes grew of more stimulus measures from China after the top consumer of the metal reported a slowing of third-quarter economic growth to its weakest since the 2008-09 global financial crisis. Prices also perched near a two-week high as upcoming labor strikes at mines threatened to trim expectations for a metal surplus, while indications of a seasonal pick-up in demand from top consumer China also supported prices. The improvement in purchasing managers' surveys in Europe and China, released will ease some worries about the out-look for those two key economies. China's flash HSBC/Markit manufacturing PMI edged up to a three-month high of 50.4 from a final reading of 50.2 in September, and just a hair's breadth from the 50.3 reading forecast by analysts.
On the demand side, Chinese firms showed slight improvement with industrial profits in September up 0.4 percent from a year earlier, reversing a 0.6 percent annual decline in August. Chile is expected to produce a record 5.83 million tonnes of copper this year, rising to 6.23 million next year, as per state copper commission Cochilco. A 17.5 percent increase in copper inventories monitored by the Shanghai Futures Exchange kept the rally in metal under check. The global copper market is broadly expected to move into a significant surplus next year, but supply typically falls short of estimates due to unforeseen events such as strikes and problems in mining for ever-deeper and hard-to-get ore deposits.
Copper prices rebounded in the second half of the month after witnessing a sharp selling earlier where they tested a four month low of Rs 404.50/kg. Prices have formed a morning star pattern on the weekly charts which suggests a bullish setup going forward, while the RSI on the weekly charts has also given a buy crossover supporting the price pattern. The counter is having an immediate support Rs 404/kg and Rs 395/Kg which might prove to be a good accumulation range over the long term. While going ahead for the coming month prices have a stiff resistance of Rs 424/kg and Rs 432/kg which needs to be breached decisively for the copper bulls to take the counter away from the grip of the bears. Traders are advised to buy on dips keeping a stop loss below Rs 395/Kg for tar-gets of Rs 432/Kg and Rs 440/Kg.