BA:Copper August Contract is down by a marginal 0.60% as of afternoon trade at Rs 413.65
Copper at the Multi-Commodity Exchange of India (MCX) has been relatively flat on Monday on concerns that China control credit expansion in a bid to tame inflation.
Copper August Contract is down by a marginal 0.60% as of afternoon trade at Rs 413.65. November Contract is also trading lower by almost 0.60%.
At Shanghai, copper futures fell for the first time in 3 days. The November-delivery contract on the Shanghai Futures Exchange dropped as much as 0.6 percent to 67,060 Yuan ($10,505) a metric ton and was at 67,380 Yuan by 10:47 a.m. local time, Bloomberg reported.
China is aiming at controlling lending growth in a bid to control high inflation. But such controls on lending are bearish for base metals. Beijing has asked banks to hold increased reserves. This increase in reserve requirements may drain over 900 billion Yuan from the banking system over the next 6 months.
"Some banks told us they received the notice about the bank liquidity tightening move on Friday, although there hasn't been any official notices on it. In the longer term, this, along with fears of softness in global economic growth, will pressure Copper prices. In the short term I think base metal price movements will be small as investors struggle to find direction after Bernanke's speech, where he didn't offer anything concrete on the U.S. economy but gave us some hope," said Zhao Kai, analyst at Jinrui Futures, Reuters reported.
However, an expected strike at Indonesia’s Grasberg, the world’s 3rd largest copper mine, may curtail losses. The mine also has the biggest Gold reserves.
GEOJIT Comtrade view:
MCX Copper August: Dips to 410/406 to hold for 420 now, a direct fall below 402 could dent this bullish view.
