Base metal prices ended with gains of anywhere between one to three percent. US GDP in the fourth quarter grew by 3.2 percent lead by a strong 4.4 percent growth in personal consumption. Zinc price with gains of 3 percent on MCX was the top performer as it got additional boost from short covering.
US equity markets ended down with losses of 1.6 percent after reports of civil unrest in Egypt raised fears of geo-political issues.
Taking cues most of the Asian equity markets have also opened on the lower side with the exception of Shanghai which is trading higher by half a percent. Japan’s industrial production grew at a fastest pace in 11 months to 3.1 percent in November.
In the morning session on LME, base metal prices are trading higher with average gains of one percent owing to higher industrial production growth in Japan and other positive data releases from US. Copper prices in Shanghai are trading higher by almost 2.5 percent. Dollar index is also trading modestly in green ahead of data releases.
On the economic data front, personal income and personal spending data from US are expected to come in higher along with improvement in retail sales in Germany. Overall, given the expectation of positive economic data, we expect base metal prices to remain on the higher side.
Aluminium
Aluminium prices rose by more than two percent after the basis on LME declined to $8/tonne as against $18/tonne on the previous day.
Aluminium stocks on London Metal Exchange witnessed draw downs of 6,050 tonnes thereby marking fifth consecutive decline.
For the whole week stocks declined by 25,650 tonnes and warehouses in China also witnessed draw down of 3,943 tonnes.
Copper
Copper prices rose by less than a percent as increasing stocks limited the gains.
Copper stocks witnessed build-up of 800 tonnes on London Metal Exchange as against increase of 2,575 tonnes on the previous day. Stocks have now been increasing for six consecutive sessions.
For the whole week stocks rose by 16,775 tonnes. However warehouses in China witnessed draw-down of 1,114 tonnes.
Lead
Lead stocks on London Metal Exchange rose for fifth consecutive session. Stocks increased by 2100 tonnes. For the whole week, stocks increased by a massive 14,850 tonnes.
The cancelled warrant ratio continues to move lower indicating that the stocks build up might continue in the near term. On LME, the cancelled warrant ratio stands at just near 1 percent.
The premium on Spot LME prices rose to $79/tonne indicating strong demand.
Nickel
Nickel stocks witnessed draw down of 888 tonnes as against increase of 324 tonnes on the previous day. For the second consecutive week stocks declined. Total draw-down for the week amounted to 1,398 tonnes.
The open interest rose by nearly 38 percent along with price rise indicating build up of long positions.
The cancelled warrant ratio though declined modestly continues to remain near average levels.
Zinc
Zinc was the top gainer among the base metal pack as it ended with gains of more than 4 percent on LME. Short covering pushed the prices higher.
Zinc stocks on London Metal Exchange witnessed a modest decline of 125 tonnes for second consecutive day.
For the whole week stocks declined by 625 tonnes. Stocks on warehouses in China increased by 1,783 tonnes thereby marking sixth consecutive weekly advance and is an area of concern for prices.
