MCX Copper To Face Resistance At Higher Levels

Copper incurred losses during the last session of the week on LME and MCX as the piling of inventories in LME came hefty on the prices leading to profit booking. Inventories of copper monitored by the London Metal Exchange rose 3675 metric tons, or 1.9 percent, to 193,900 tons, the highest since March 16. On the contrary, Copper stockpiles in Shanghai Futures Exchange fell 4.39 percent to 26390 tonnes in the week to December14. Copper three month forward in LME closed at $ 6535 per tonne as against $ 6650 per tonne previously.

On MCX, the red metal February contract which closed the last session at Rs 259.35 per kg. Open interest in the contract has depleted constantly and was 16791 down from 16862. Supports for the contract are at 256.50 levels.

Among other Base metals Nickel showed an increase of 210 tonnes in inventories to 46314 tonnes while Lead, Aluminum and Zinc demurred by 625, 1975 and 300 tonnes respectively.

In another news, International Copper Study Group has highlighted the unequal growth rates over the next couple of years between concentrates capacity and smelter capacity of Copper. It is this divergence of growth patterns, particularly the fast growth of smelter capacity in the likes of China and India that has caused the current tensions in the concentrates market. Those tensions are evidenced by the low treatment and refining charges that are currently being settled for 2008 as miners capitalize on the shortfall of concentrates availability relative to smelter needs.

Outlook:

A pullback rally can be expected in Copper in today's session, given the moderate rebound in the COMEX Copper. However, the dampness in the international equities arena as well as approaching the year end lull would make it very difficult for the red metal to post any significant gains. Nothing much is thereon the economic calendar today and we can expect MCX Copper futures for February can be expected to test a top of 261.50 in intraday trades.