Technically Copper market is under short covering as market has witnessed drop in open interest by 12.91% to settled at 11876 while prices up 2.8 rupees.
Now MCX Copper is getting support at 424.2 and below same could see a test of 421.9 levels and resistance is now likely to be seen at 429.2, a move above could see prices testing 431.9.
Copper on MCX settled up 0.66% at 426.50 on short-covering after prices fall sharply in last 3 session tracking a steep drop on the LME as investors wound in profits on concerns China could see a weaker first half of next year.
Besides a rise in copper inventories, the selloff was fuelled by concerns about liquidity tightness in China towards the year-end, amid a government-led deleveraging push, and slowing investment in the country's power sector, a key driver for copper.
The move comes after copper prices had taken their biggest hit in two years on rising stockpiles. Both the LME and Shanghai Exchange saw volumes of deliverable metal rise and reports that there are further inflows coming saw traders head for the exits.
Copper inventories held in global exchanges remain stubbornly high, even after heavy disruptions to supply from mines in Chile and Indonesia at the start of the year. A large inflow on to the London Metal Exchange was a catalyst in Tuesday’s rout, as it sent a reminder that the market isn’t short of metal.
Synchronized global growth has been a key driver for industrial metals this year, but concerns are mounting that China’s crackdown on its property market will be a headwind going forward. Physical delivery premiums covering the cost of shipping copper to top user China have been subdued this year, suggesting that the country’s buying needs aren’t placing a strain on supply.
--Copper trading range for the day is 421.9-431.9.
--Copper recovered on short covering after prices dropped on concerns over demand in top consumer China pushed investors to sell the metal.
--Indonesia said it planned to acquire Rio Tinto's, stake in the Grasberg copper mine operated by Freeport-McMoRan Inc, potentially solving a drawn-out problem for all three parties.
--Jiangxi Copper says, global supply of refined copper is sufficient with stable supply of copper concentrate, which will last to next year.
Courtesy: Kedia Commodities