India: Copper market faces downtrend ahead of festive season even as global prices drop

The domestic copper market witnessed a downtrend due to Navratri and the upcoming Diwali festival which has led to selling pressure. Many buyers are already well stocked up and it is expected that market conditions will become clearer only after Diwali.

Copper prices on the MCX dipped 0.4% to INR 704,000/t today w-o-w. SteelMint's assessment for copper armature scrap prices in India stood at INR 651,000/t, while secondary rod prices fell by 0.8% to INR 688,000/t. Also, three-month copper futures, which moved down by $50-$55/t on the London Metal Exchange (LME) to $7,970/t currently from $8,022/t a week ago have pressured prices lower.

Copper prices on the Commodity Exchange (COMEX) dipped 1.7% to $7,853/t w-o-w.

Over the past few months, the global copper market had witnessed a significant decline in inventory levels. However, this week it has witnessed gains.

According to data maintained with SteelMint, inventories in LME-registered warehouses are currently at 180,675 t, up 9,150 t w-o-w. Reduced inventory has acted as a counter-balance, preventing a significant drop in prices, SteelMint notes.

Copper prices advanced on Shanghai Futures Exchange (SHFE) as investors awaited China's GDP data, with optimistic demand projections and supply concerns boosting the market. China is anticipated to report a sharp slowdown in third quarter (Q3) economic growth to around 4.4%, but stimulus measures have raised hopes of achieving the full-year growth target. Robust copper demand was driven by renewable energy and infrastructure sectors. Glencore's decision to close Australian copper operations has also raised supply concerns.

Imported market scenario

The imported market is currently experiencing moderate demand, with sellers willing to offer discounts. The market price for copper motor scrap of US origin stood at $1,100/t CIF Mundra, and sellers are prepared to provide discounts ranging from $50-$60/t. This willingness to offer discounts is attributed to a lack of urgency among buyers.

Offers

Copper motor scrap originating from the US stood at $1,095-1,100/t.

Middle East origin birch cliff offers have been heard at 91.5% of LME 3-month prices.

Mill berry originating from the US offers are at around 98% of LME.

The tentative offers for UK origin brass honey (5%) stood at around 62.25-62.5% of LME prices.

Recent deals

3 containers of Middle East origin copper birch cliff were traded at 91.5% LME, CIF Mundra.

Around 110 t of copper mix motor scrap of US-origin were traded at $1,100-$1,110/t CIF Mundra recently.

40 t large copper motor scrap from the US were heard at $1,020/t, CIF Mundra.

Outlook

Copper's near-term outlook is optimistic, but it faces challenges from weak western demand and supply imbalances. Strong Chinese infrastructure projects help balance the market, but export issues and surpluses create uncertainty. Clarity in the Indian domestic market may emerge only after Diwali.