Wednesday, 10 April 2013

World Copper Mines Will Boost Supplies, Copper To Remain Under Pressure

The Copper prices recovery may be short lived considering heavy supplies coming in the markets in few months time. The ageing Copper mines and supply disruptions was the most critical factor that made Copper markets to remain in deficits in last few years. The scenario has changed and miners like BHP Billiton and Freeport McMoran etc have plans to increase their production capacities. BHP Billiton is planning to set up a new plant in Escondida to expand mining of ores. Taking this into account, it is probable that Copper recoveries will be short lived whenever that happens.
Another critical factor is the drop down in Chinese imports. China consumes 40 percent of Copper in the world, decline in imports by more than 30 percent as per the latest data indicates that the Bull Run for Copper is over and prices are under clutches of bears.
Fund managers have been increasing their shorts to record levels as per COT report. Commitment of trader's weekly report highlighted tough days for Copper. The report showed that fund managers continued to increase their short positions. The total short positions gained by 7582 contracts taking total short contracts number to 60302. Long contracts showed a decline of 1382 contracts and were at 21302. Total net short positions therefore moved up by 30% to 39000 contracts.
LME inventories were at 587925 tonnes, up 85 percent in 2013. Shanghai inventories was at 241943 tonnes, up 18 percent in 2013. Indian Copper futures for April expiry declined by 0.5 percent, after testing high of Rs 414.3 per kg. The prices tested levels of Rs 412.5 per kg. LME Copper three month prices are seen trading at $ 7565 per tonne, down $ 10 per tonne from last night.
In economic news, Eurozone GDP is expected to contract 0.3% this year which will further reduce the demand for Copper and other metals. Dollar was trading at 1.3056 against Euro, up 10 pips.
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