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.
Technically 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 Copper is getting support at 424.2 and below same could see a test of 421.9 level, And resistance is now likely to be seen at 429.2, a move above could see prices testing 431.9.
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