Prospects turns bearish for MCX copper
The bullish outlook for a rally to ₹400/kg in the copper futures contract traded on the Multi Commodity Exchange (MCX) mentioned in this column last week did not materialise.
The contract recorded a high at ₹391.25 on June 10 and reversed sharply lower from there.
It is currently trading at ₹372. The outlook is bearish now. Immediate resistance is at ₹380 and the next key resistances are poised at ₹383 and ₹389.
Any intermediate rallies could attract fresh selling interest in the market at higher levels.
Immediate support is at ₹370. A corrective bounce from this level cannot be ruled out.
So short-term traders can stay on the sidelines at the moment and wait for a bounce to initiate short positions at higher levels. However, traders with a medium-term perspective can go short at current levels. Stop-loss can be placed at ₹382 for the target of ₹360.
Intermediate rallies to ₹380 can be used to accumulate short positions.
The next key support to watch is at ₹367 – the 61.8 per cent Fibonacci retracement level.
A break below this level can drag the contract lower to ₹357 in the coming weeks.
The outlook will turn bullish only if the contract records a strong break and close above ₹392 – the 200-day moving average.
Such a break will ease the downside pressure and take the contract higher to ₹400 and even higher levels there after. But such a strong reversal and rally looks unlikely at the moment.
China factor: Centre hikes steel import duty
In an effort to protect the domestic steel industry from surging Chinese imports, the Finance Ministry has hiked the duty imposed on various categories of steel.
However, categories such as stainless steel (flat) and CRGO (cold rolled grain-oriented electrical) steel have been exempted.
A senior Finance Ministry official said that barring exempted categories, steel products with 5 per cent duty will attract 7.5 per cent duty from Wednesday, a 2.5 percentage point increase. Products (barring a few) having 7.5 per cent duty will now have 10 per cent duty, again a 2.5 percentage point increase.
The official said the duty on ingots & billets, alloy steel (flat & long), stainless steel (long) and non-alloy long products will now be 7.5 per cent. At the same time, non-alloy flat products and other alloy flat products will attract a duty of 10 per cent.
However, CRGO (which is used mainly in transformers) will continue to attract 5 per cent duty, while stainless steel (flat) will invite 7.5 per cent duty.
Following the hike, shares of listed steel companies made smart gains on the bourses.
Though the industry feels that the hike should have been higher, Ministry officials said considering the current market situation, it is sufficient and will certainly curb dumping. Steel imports rose 69 per cent in the April-January 2014-15 period and reached 8.12 million tonnes. Out of this, China’s share was 2.9 mt, a whopping 205 per cent rise from 953,350 tonnes in the same period a year ago.
It is this that prompted both the steel companies and the Ministry to push for a duty hike.
Following the Finance Ministry’s decision, Steel Minister Narendra Singh Tomar said after anti-dumping duty, this is another concrete step toward ‘Make in India.’
ACC restarts mining in Odisha
Cement major ACC has resumed limestone mining at Bargarh in Odisha as the mining lease of the company was renewed under the new Mines and Minerals (Development and Regulation) Act.
The company suspended mining in Odisha last October after the Supreme Court ordered the state government to stop companies with deemed licence from mining. The impact of the closure was not material since cement grinding continued with sourcing of clinker from other places, said the company in a statement.
Govt planning significant increase in draught at Major Ports
The government proposes to increase the draught at all Major Ports up to 18-20 metres, the Union Minister of Shipping, Road Transport and Highways, Mr Nitin Gadkari, said recently.
This would help in maximising the revenue at a Port, he added, pointing out that there would be a sizeable uptick in revenue if the draught is improved. An increase in draught by just 2 metres could result in a per tonne revenue difference of up to $30, he said.
For one, larger vessels can be berthed at a Port having better draught, thereby enabling it to handle more volumes. It also facilitates improved economies of scale for the lines.
Draught has been a major bane at the Major Ports, generally averaging 11-12 metres. The ports earmark a sizeable capital expenditure every year for maintenance dredging. This could all change if the Minister’s plans come to fruition, with capital dredging projects being taken up, through PPP as an important option, to enhance the draught. The Ministry, too, would be funding the projects, he said.
A PPP project to increase draught has been initiated at Mormugao Port, Mr Gadkari pointed out.
JN Port, the country’s leading container handling facility, has completed its first phase of capital dredging to increase the draught to above 14 metres. The second phase envisages taking it to over 17 metres.
This post was written by Atlantic Admin