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Copper, meanwhile, on the MCX may find support at 392 and 388 levels and resistance at 408 and 412 levels, said John Godson, Technical Analyst with Commodity Online. “It is expected to remain bullish for the res..

25 Jun 2013

Commodity Online
Copper futures seem to have come a full circle or has taken an abrupt U-turn, as analysts say. The commodity was in an extreme bearish territory in the morning as China credit crunch situation loomed large on markets.

On India's MCX, copper for delivery on June was spotted trading at Rs.402.65 a kilogram, up by 0.47% as of 04.28 PM IST. In the morning session, the commodity was seen trading at Rs.394.65 a kilogram, a loss of 1.53%. Also copper on the Comex for delivery on September 13 was spotted trading at $2.991 a pound, a loss of $0.048 or 1.59% at 10.44 AM IST.

The soothing words from Peoples Bank of China's deputy director of the Shanghai branch that China would maintain money market rates at reasonable levels even as the seasonal forces that drove the rates up would fade. The liquidity risks that the system faced was controllable and the PBOC would closely monitor rates.

"China's new leaders are determined to address the financial risks that have built in the financial system because of excessive lending," said Koen De Leus, senior economist at KBC to Reuters.

The good news from Ling helped markets to change the track indeed.

Copper, meanwhile, on the MCX may find support at 392 and 388 levels and resistance at 408 and 412 levels, said John Godson, Technical Analyst with Commodity Online. “It is expected to remain bullish for the rest of the day,” he noted.

The credit fears pertaining to China ensued last week when People's Bank of China decided to refrain from injecting liquidity into the money supply system causing a sudden spike in inter-bank lending rates or Shibor rates.

The seven-day Shibor rate climbed all the way to 12% and overnight repo rate appreciated to 25% creating an interbank liquidity vacuum. But when the PBOC asked the banks to restart lending, the rates eased.

The economy apparently has hit the brakes on economic growth in a bid to make it much more sustainable.

Currently, Chinese economy with growth projections in excess of 7% looks overheated and the unregulated shadow banking has added to credit woes.

Copper on the Comex for delivery on September 13 was seen trading at $3.058a pound, a gain of $0.029 or 0.96% as of 04.50 PM IST.


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