Copper prices surge on supply concerns
2009-07-31 16:17:4
Copper traded in the positive trajectory, surging to a nine-month high driven by supply concerns and rising expectations of a demand recovery. Although restocking by China State Reserves Bureau may be over; imports still remained at comparatively high levels due to a shortage of scrap. Indications of a demand pickup were underlined by a fifth straight month of record Chinese refined copper imports, up 12.4% from a month earlier. Aiding to the prices was a power problem with Chile's Collahuasi copper mine in its main conveyor belt causing potential damage resulting in supply disruption.
Output at Chile's Escondida, the world's largest copper mine, fell 30% in the first quarter from a year earlier due to lower ore grades and the failure of a semiautonomous grinding mill, which is used to pulverize rock. Copper has maintained its upward streak for almost the whole of this month. After finding major support at Rs235/kg and its 50 Day EMA (as can be seen in Daily charts), it has been cheering up bulls, by moving up consistently, with minor corrections.
The trend continues to remain firm, even though the expected level of Rs270/kg has almost been achieved, which is a new high of 2009. Bulls are refusing to give up and are bent upon taking the red metal to further highs of around Rs300/kg in MCX and $6450/t in LME, incase of breach of stiff resistance of Rs275/kg and $5780/t in LME convincingly, which might be possible in coming days, if we witness further northbound rally in equity market, which is providing a wave of optimism to all base metals.
But traders also need to be cautious at higher levels, as some healthy profit booking can be witnessed, as is needed for continuation of this bullish phase, after a prolonged period of slump witnessed last year. Initial support seems to be provided by the level of Rs258/kg and subsequently Rs245/kg.
Courtesy: Religare Commodities
http://www.commodityonline.com/futures-trading/technical/Copper-prices-surge-on-supply-concerns-11638.html
