Commodity Radar: Copper slips on China concerns but expert suggests taking long positions. Here’s why

Domestic copper prices slipped on Tuesday, taking cues from prices in the international market in the early trade amid concerns of a slowdown in manufacturing activity in top consumer China. Moreover, a stronger dollar weighed on sentiments with the dollar index hovering near the 100 mark against a basket of six major currencies.

The November copper contracts on the MCX were trading at Rs 1,004.10 around 11 am, down by Rs 5.10 per kg or 0.51% over the Monday closing price. Meanwhile, the last recorded price of 3-month copper contracts on the London Metal Exchange (LME) was down 0.3% at $10,855 a metric.

Commenting on the current trends, Ajit Mishra, Senior Vice President at Research, Religare Broking, said that copper’s easing of the upward movement of late has been following the disappointments around Chinese economic data. However, the demand outlook is brightening in Europe, where car sales rose for a third straight month in September, with sales for electric vehicles in particular jumping by 33% roughly,” he said.

“The supply-side issues are expected to persist, after Anglo American warned that copper production at its Collahuasi mine in Chile will likely be lower than expected next year, exacerbating a tight market. The participants, meanwhile, continue to look forward to fresh updates from the U.S.-China trade deal after negotiators had reached some agreements on the tariffs,” Mishra said.

Technical view

The weekly chart of MCX Copper shows a strong uptrend with prices currently near Rs 1,005, having cleared key moving averages, suggesting bullish momentum, Mishra highlighted.

“Momentum indicators affirm the uptrend, but against the recent upside move, a near-term correction can occur. Immediate support is seen around Rs 995-998, with similar resistance between Rs 1022 and 1025, a level, which if crossed, could trigger further upside towards Rs 1040+ in the coming weeks,” the Religare analyst said.