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G. Chandrashekhar

Demand, supply contributing to market mood; nickel offtake rising

UP, UP: With copper stocks declining, prices are set to rise further this week

Mumbai , March 26

World copper prices seem to be poised for a bout of further hardening, with both demand side and supply side factors contributing to the market mood.

Inventory drawdowns in the current environment are seen having a strongly positive impact on prices. For instance, last week, LME stocks were down 6,700 tonnes to 1,24,800 tonnes, with outflows having accelerated towards the end of the week. Outflows are occurring at Asian warehouses (Singapore and Busan) believed to be shipped directly top consumers.

Stocks at Shanghai exchange are also reportedly down.

Last week saw 7,100 tonnes moving out and the stocks are now estimated at 34,400 tonnes, the lowest since October last.

Strong US housing data helped buoy the sentiment, while supplies from Indonesia are suspected to have become unstable.

Indian copper demand is expected to grow by 4.5-5 per cent over the next 2-3 years.

Surge in nickel

Nickel, too, is poised for an upward surge. Consumption of the metal in China has been rising with many stainless steel plants expanding production this year.

China is expected to consume about 200,000 tonnes of nickel this year compared with 185,000 tonnes last year.

It would be advisable buy into price weakness (below $ 15,000-a-tonne level), according to analysts.

During the weekend, copper zoomed to $5,276 a tonne in London electronic trade, while nickel declined to $15,200 a tonne.

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