India: Copper prices exhibit downward trend as stocks rise

Copper prices in the Indian domestic market witnessed considerable downward correction on a d-o-d basis today. The major price contract, a benchmark, was proportionately reduced by primary copper wire rods manufacturers by 1.7% or INR 13,000/t ($168/t) to INR 763,000/t ($9,850/t) followed by copper armature scrap which reduced by INR 8,000/t ($103/t). Secondary continuous casting (CC) wire rods prices also dropped by INR 3,000/t ($39/t). All the prices fell on a d-o-d basis.

Copper armature scrap, after the corrections, stood at INR 697,000/t ($8,998/t), secondary CC wire rods at 743,000/t ($9,592/t) and primary copper wire rods were assessed at INR 763,000/t ($9,850/t), as per SteelMint data.

Factors that contributed to price correction are:

• Inventory piles up: Daily stock levels through the registered warehouse at LME moved up by 1,000 t and weekly stocks too moved up by 6,850 t, leading to more inventory in the market.
• MCX stocks stable: On the contrary, MCX stocks, even though they did not contribute to the drop in prices, were almost stable on a d-o-d basis and weekly stocks were negligibly down by 40 t to 1,635 t till yesterday.
• LME prices drop to record low: LME three-month prices breached January 2022 levels to reach the lowest level of $9,032/t as of 12 May, 2022, almost down by around 12% m-o-m.
• Currency depreciation worries importers: Currency depreciation in India is a worrying factor for importers where it has touched the lowest levels of almost INR 78 against the dollar (USD). Buyers of pure copper scrap as well as by-products like meat-balls or motor scrap have been impacted badly. Since they have to pay more, they have gone into watch-and-wait mode. 
• FDI withdrawal worries for market: Recently released inflation figures or the consumer price index point to a downward trend. This would trigger withdrawal of foreign direct investment (FDI) which is worrying the equity and commodities markets. As a result, there is a constant d-o-d drop in prices.
• Global sentiments down: The market saw weak transactions influenced by soft sentiments in the global market amid lower operational costs in China owing to rising Covid cases.
• Copper imports down: Further, monthly copper imports were down. The country bought 465,330 t of unwrought copper and copper products in April 2022, down 8% m-o-m from 504,009 t in March 2022 and down 4% y-o-y from 484,890 t in April 2021.