India: Copper prices edge higher w-o-w on firm LME trend; sellers hold scrap inventories

• Sellers withhold inventories amid expectations of further price gains
  
  
• Stronger scrap demand seen in north India as new plant discussions emerge
  
  

Imported and domestic copper scrap prices in India moved up w-o-w in the week ended 11 March, supported by a firmer trend on the London Metal Exchange (LME) and improving buying sentiment in the physical market. Market participants reported relatively tight spot availability as several sellers preferred to hold inventories in anticipation of further price increases.

Copper prices on the London Metal Exchange (LME) rose slightly w-o-w. LME three-month copper stood at $13,025/tonne (t) on 10 March, compared with $12,915/t on 5 March, reflecting a marginal increase supported by improving global sentiment.

According to BigMint's assessment, copper armature scrap, ex-Delhi, was assessed at INR 1,140,000/t, down 0.4% w-o-w. In the imported scrap segment, Brass Honey from Europe was assessed at $7,230/t CFR Nhava Sheva, up 7.6% w-o-w, while copper motors scrap from the US stood at $1,500/t, down 3.2% w-o-w.

Market insight

Copper scrap prices in India remained on the positive side w-o-w, supported by improving market sentiment and stronger bids from buyers on 11 March. Market participants noted that the tightness currently visible in the market is not necessarily due to an actual shortage of copper material, but rather because several sellers are holding back inventories in anticipation of further price increases amid uncertainty in global markets, particularly on the LME.

According to traders, expectations of higher prices have encouraged stock-holding behaviour, which has temporarily tightened spot availability in the market. At the same time, scrap demand has strengthened in the northern region following discussions around the commencement of four to five new plants, which is expected to increase consumption of copper scrap in the coming months.

Some traders have also started sourcing copper scrap from African origins despite higher premiums. These suppliers often undertake sorting and processing before shipping the material, allowing buyers to procure relatively cleaner grades that can be resold at higher prices in the domestic market.

In addition, amid ongoing geopolitical uncertainties and disruptions in global trade routes, buyers are securing material from whichever origins are available. As a result, a few deals for mixed-grade copper scrap were also reported at premium prices.

While sellers continue to hold material for now, some indicated that gradual destocking may begin in the coming weeks to maintain supply chain flow. Meanwhile, buyers remain active in the market and have started quoting higher bids to secure near-term requirements.

LME market drivers

On the global front, copper prices received support from improving macroeconomic sentiment, particularly from China. Stronger-than-expected economic signals and bargain buying after recent declines helped lift prices.

China's latest economic indicators offered some support to market sentiment. Data from the National Bureau of Statistics showed that the country's official manufacturing Purchasing Managers' Index (PMI) stood at 49.3, slightly below the 50-point mark that separates expansion from contraction but still close to stabilisation levels after earlier weakness.

Following the positive cues from China, copper futures on the Multi Commodity Exchange of India (MCX) also moved higher. The most-active March copper futures contract was trading at INR 1,204,800/t, up nearly 1% from the previous close, while the three-month copper contract on the LME also gained during the session.

Market participants noted that bargain buying from Chinese investors after the previous sessions weakness further supported prices, while expectations of improving industrial activity in China continue to underpin demand prospects for the red metal.

Outlook

The Indian copper scrap market is expected to remain firm in the near term, supported by steady buying interest and expectations of higher prices. However, trading activity may remain cautious as participants continue to monitor global copper price trends, geopolitical developments, and demand signals from China.