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G. Chandrashekhar

Mumbai , Aug 20

THE International Copper Study Group's latest assessment shows the copper market in deficit by 1,65,000 tonnes in the first five months of the year.

In May alone, the deficit was an estimated 37,000 tonnes. This compares with the reported stock drawdown of 28,000 tonnes.

Following several weeks' steady gains, copper prices sold off heavily last Wednesday, falling by around $110 a tonne.

However, despite the excitement over the price reversal, the market bounced back later to an extent that prices were down only modestly for the week as a whole.

Last Friday, cash prices were up marginally during late trading in London, in spite of a further increase in copper stock by 400 tonnes to 61,125 tonnes. No wonder that this year, copper has been the star performer among base metals.

"For the year to date, copper remains the best performer among base metals, with Friday's London Metal Exchange's (LME) official price (that is the early afternoon, not the closing price) just over 20 per cent above the first trading day of the year," commented Mr Adam Rowley, metals analyst with Macquarie Research Commodities. He added that the next best performer has been zinc, with prices up by nearly 10 per cent so far this year.

Besides being the strongest performer this year, copper is the metal closest to the year's highs, with cash prices on Friday within one per cent of the year's high.

In fact, copper hit its highest-level to-date at the beginning of the month. Four of the other base metals peaked in March, while nickel peaked in May.

Copper prices rebounded in early June on a wave of short-covering as the much anticipated surplus failed to arrive, and has hardly looked back since then.

Prices have rallied by over 20 per cent from the May low.

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