Technically Copper market is getting support at 420.7 and below same could see a test of 417 levels and resistance is now likely to be seen at 429.3, a move above could see prices testing 434.2.
Copper on MCX settled down 1.54% at 424.20 fallen to a three-week low as traders take profit, prices suffered another sharp decline as disappointment about imports by China, responsible for some 46% of global consumption of the metal, rising stock levels at LME warehouses and receding mine supply worries saw the rally come to a screeching halt.
The prospect of a weakening renminbi also emerged as a factor behind the pullback after Chinese policymakers this week relaxed rules to curb speculation against the yuan which had been in place for nearly two years.
A correction on copper markets may also have been overdue as speculative interest has been running ahead of industry fundamentals. Hedge funds built successive record net long positions – bets on rising prices – in recent weeks which according to the latest report totalled the equivalent of more than $9 billion at prices.
Reports at the end of July that China is planning to ban the importation of scrap copper by the end of next year sparked the rally from copper's summer lows, but caught many in the industry by surprise.
Meanwhile LME data shows funds' net long copper position at 71,827 lots, or more than 1.8mtns, is down from a peak of 78527 lots late in August but still near its highest since last December.
Also Copper stocks in LME approved warehouses are up 38,150 tonnes at 246,575 tonnes since last week. Higher stocks and worries about an oversupplied copper market helped push the discount for the cash over the three-month contract to above $US40 a tonne, its highest since December 2009.
--Copper trading range for the day is 417-434.2.
--Copper prices fell on profit-taking, rising stocks in London Metal Exchange warehouses and nervousness about demand in China.
--Copper stocks in LME approved warehouses are up 38,150 tonnes at 246,575 tonnes since last week.
--Higher stocks and worries about an oversupplied copper market helped push the discount for the cash over the three-month contract to above $40 a tonne.
Courtesy: Kedia Commodities