Hindustan Copper Shares Hit 52-Week High As Global Copper Prices Soar
Copper rallied to highest in over a year due to tightening supply conditions and renewed optimism surrounding Chinese demand.
Shares of Hindustan Copper Ltd. surged over 9% to 52-week high on Tuesday after prices of copper in the global market hit their highest levels in over a year. The metal rallied on the back of tightening supply conditions and renewed optimism surrounding Chinese demand. Copper prices spiked to $9,484.50 a tonne on Monday, the highest since January 2023, before pulling back slightly, marking a remarkable 15% increase over the past two months.
The stock also came out of F&O ban on Tuesday. This means traders can open new futures and options contracts in the stock.
Supply Constraints, China Optimism Drive Rally
Major disruptions at copper mines worldwide have led to supply constraints, pushing smelters to pay historically high prices for copper ore. Additionally, Chinese copper producers are considering output cuts in response to supply disruptions, further fueling the rally.
Positive Signs For Chinese Economy
China's manufacturing activity remains robust, as indicated by the official manufacturing purchasing managers index, which spiked to its highest level in a year. Strong exports and rising consumer prices added to optimism about the Chinese economy's resilience. Ewa Manthey, a commodities strategist at ING Groep NV, foresees sustained demand for copper in China, driven by the increasing adoption of renewable energy and electric vehicles.
Outlook For Copper Prices
Copper prices are expected to continue their upward trajectory in the coming months, traditionally the strongest demand season for the metal.
ING Groep forecasts an average copper price of $9,050 a tonne for the quarter, representing a significant increase from the previous quarter. However, challenges such as weaker demand from China's property market and uncertainty over US monetary policy could temper price gains.
Copper is currently trading at $9,443.50 a tonne on the London Metal Exchange.
Implications for Hindustan Copper
Hindustan Copper stands to benefit from the bullish momentum in the global copper market, as reflected in the surge in its share price to a 52-week high.
Shares of the company was trading 9.02% higher at Rs 361.25 apiece, compared with a 0.17% rise in the benchmark Nifty 50 at 12:25 p.m. The stock had risen as much as 9.76% to hit a 52-week high of Rs 366.25 on the NSE.