Asian currencies gain as yen hits seven-month high, dollar stays subdued
In New York trade on Friday copper for delivery in December consolidated recent gains jumping to a nearly 8-week high of $2.4645 per pound or around $5,430 a tonne for a 6.5% rise during the holiday shortened week.The red metal has recovered strongly from six-year lows struck late August, but remains down 13% year to date after a 16% fall in 2014.The latest rally was inspired by the announcement of steep produection cuts by Glencore (LON:LONDON:GLEN), the world's number four producer of the metal.
Basic Fundamentals Of Copper
In free market economies, supply and demand is the primary enabler for price movement. Any outside forces that affect supply and demand eventually affect prices. When you are considering a trade in the copper market some of the basic fundamentals that you should consider are:
1. Supply The major refining nations include the United States, Japan, Chile, Canada, Zambia, and the European Union. Copper and copper alloy scrap compose a significant share of the world's supply. The largest international sources for scrap are the United States and Europe. Chile, Indonesia, Canada and Australia are the major exporters while Japan, China, the European Union and Philippines are the major importers. World copper mine production through exploration of new mines and expansion of existing mines is a major factor that affects copper supply and pricing.
2. Supply Disruptions Strike periods that occur with expiration of labor contracts have a significant effect on copper prices. Additionally, earthquakes, shipping problems, and political unrest in Chile, Peru, and South Africa can cause a decrease in supplies of copper and cause copper futures to rally.
3. Demand The largest refined copper-consuming nations have long been the industrialized countries with large manufacturing bases. The major copper-consuming nations are the European Union, the United States, Japan, Russia, and China. Since the 1950's, the trend has been toward increased consumption by the Asian countries, particularly Japan, South Korea, and Taiwan, mainly to support export-oriented fabrication industries. More recently, China has become a major user of copper and accounts for an increasing amount of demand for copper.
4. Inventory Stocks LME and NYMEX are the two international markets where copper trades. Changes in the inventory stocks in LME and NYMEX warehouses provide future price direction for the copper market.
5. Copper Supply Reports The main report for copper futures is the Copper - High Grade Warehouse Stocks. This report indicates whether copper supplies are increasing or decreasing.
These are just some of the basic fundamentals to keep in mind when you are considering a trade in the copper market. Therefore, before opening up a commodity account to trade copper you should consult with a licensed commodity broker that follows the copper market to discuss investment strategies.
MCX copper creates on weekly chart a format of head and soldier as a top reversal which gives sign for improved pro trend will remain with short covering at decline on near support 361 and 357 in copper. You may see low near 351.40 by breaking Rs.357 and being close below it. Short to medium term technical indicators have been successful to coming out from the overbought phase which shows entire boom moves was observed in short term can be found turned into the selling if the price steady remains below the support in copper.
The tower top candle pattern is becoming on the last three days of the week which shows little accidental selling remain unchanged below the resistance. Two months chart is creating rounding bottom reversal pattern similarly, crucial breakout Rs.377 can be considered toward resistance. You can also keep in mind 50 DMA $2.400 as the near support for US copper.
