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Copper Insight

Copper Insight

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Published by Pramod Mane
Copper price forecast using fundamental and technical analysis
Copper price forecast using fundamental and technical analysis

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Published by: Pramod Mane on Dec 07, 2010
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05/05/2011

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Date: December 07, 2010
Copper Insight
Date: December 07, 2010
Copper Review
After yesterdays choppy trading today copper has gained by 1.25% on LME and trading at Euro 8870/MT level overthe concern of falling inventories and expectation that demand will outpace supply in coming days.Weakening dollaralso pushing the base metal prices amid of slow global recovary.
Fundamental Analysis
LME Copper Inventories
The biggest slump in copper inventories in six years is compounding shortages as prices head toward record highs,making the metal more attractive for investment.Demand will outpace supply by 367,500 metric tons next year,enough for wires, pipes and appliances in about 1.8 million U.S. homes, according to the median forecast of Bloomberg. Global exchange inventories have dropped 22 percent this year,heading for the largest slide since 2004.
 Alongside chart showing theinverse relation between LME copper Inventories and copper  prices.Since July 2010 Inventoriesstart falling moving priceshigher and higher.
 
 
Date: December 07, 2010Mine Production
Production at Escondida, the world’s largest copper mine,
will drop as much as 10 percent in the 12 monthsending in June because of lower grades, Melbourne-based BHP Billiton, the largest shareholder, said in astatement Aug. 25.The major copper reserves that are being produced today come from 100 year-old mines, with fewexceptions,which is indicating that possibility of reduction of production is high.
Demand
Aurubis AG, Europe’s largest smelter, is also predicting
higher demand next year as they are getting good ordersflow. Consumption in China, India, Brazil and the Middle East will expand at an average annual rate of 7 percentper capita through 2015.Demand may also be boosted if JPMorgan, BlackRock Inc. and ETF Securities Ltd. start exchange-traded productsbacked by the metal. Such funds could hold as much as 250,000 tons.
Technical Outlook
Above copper daily chart on MCX has formed the symmetrical triangle( cont.) chart pattern and given upsidebreakout. We are expecting it to touch Rs 408/410 levels in coming days.

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