India: Copper prices witness downturn ahead of Diwali

The domestic copper market witnessed a decline this week which can be attributed to Navratri and the upcoming Diwali festival, resulting in increased selling pressure. Many buyers have already amassed ample inventories, and it is anticipated that market trends will emerge more clearly post Diwali.

Copper prices fell on Wednesday, heading for a weekly loss, mainly due to weak global demand. Soft demand in various regions affected copper's performance, This highlights the ongoing global challenges.

Many participants currently possess material acquired at higher prices and are reluctant to sell at current lower rates. Market conditions are quite unfavourable at the moment, as even major mills are displaying a lack of buying interest.

Copper prices on the MCX dipped 1.3% w-o-w to INR 693,000/t today. SteelMint's assessment for copper armature scrap prices in India stood at INR 646,000/t, while secondary rod prices fell by 0.6% to INR 683,000/t. However, three-month copper futures moved up by $55-$60/t on the London Metal Exchange (LME) to $8,032/t w-o-w.

Copper prices on the Commodity Exchange (COMEX) remained almost firm at $7,853/t w-o-w.

Miren Lodha, Director of CRISIL Market Intelligence & Analytics, said that "the new capacity of Kutch Copper will likely change trade dynamics".

In a recent development, the Adani Group is making a billion-dollar investment to create a refining capacity of 1 million tonnes (mt), with 500,000 t expected to start production by March 2024.

China GDP

China's Gross domestic product (GDP) grew 4.9% in July-September from the year earlier, data released by the National Bureau of Statistics showed, but slower than the 6.3% expansion in the second quarter. On a quarter-on-quarter basis, GDP grew 1.3% in the third quarter, accelerating from a revised 0.5% in the second quarter.

Imported market scenario

Prices of copper motor scrap of US origin stood at $1,070/t CIF Mundra, and sellers are prepared to provide discounts ranging from $30-$40/t. This willingness to provide discounts is a response to the lack of urgency among buyers.

Deals and offers

US-origin copper motor scrap prices stood at $1,070-1,080/t.

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

Mill berry originating from the US is being offered at around 97.5% of LME price.

Around 25 t of copper mix motor scrap of US-origin was traded at $1,070/t CIF Mundra recently.

Outlook

The short-term prospects for copper are positive, but they contend with obstacles like subdued demand in the West. Robust infrastructure initiatives in China offer some stability, A clearer picture in the Indian market may emerge post Diwali.