Base Metal prices ended lower with losses of anywhere between half to two percent tracking lower equity markets. Chinese interest rate hike sent equity markets lower thereby impacting base metal prices. Germany’s exports grew at a faster pace than imports thereby widening its trade surplus.
US equity markets ended with modest gains thereby marking eighth consecutive advance. Gains were however trimmed after Fed Chairman indicated that unemployment rate might remain higher for a long time.
Asian equity markets are trading mixed but largely on the positive side with Shanghai markets trading higher with gains of close to half to percent. Dollar index is trading modestly higher ahead of key data releases. In the morning session on LME, base metal prices are on the higher side with gains of close to half a percent.
On the economic data front, industrial production data from UK is expected to come in higher and the Bank of England is expected to keep interest rates unchanged at 0.5 percent. In US, both initial jobless claims and continuing claims are expected to decline.
Overall, given the moderate rebound in the equity markets and expectation of largely positive economic data, we expect base metal prices to remain on the higher side. However, gains in lead and zinc might remain limited.
Aluminium
Aluminium prices ended down by 0.8 percent on LME while on MCX they declined by 0.4 percent.
Aluminum stocks on London Metal Exchange witnessed build-up of 39,225 tonnes as against decline of 1,200 tonnes on the previous day.
Open interest rose marginally while prices declined by 0.4 percent indicating short build-up of positions.
Copper
Copper stocks on London Metal Exchange witnessed build- up of 4,375 tonnes as against draw down of 1,500 tonnes on the previous day.
The cancelled warrant ratio continues to remain lower indicating that the stocks might continue to witness build-up in the near term.
Though prices fell by 1.3 percent on LME losses on MCX were limited to the extent of half a percent.
Lead
Lead stocks on London Metal Exchange rose for 13th consecutive session. Stocks rose by 1,125 tonnes as against increase of 2,450 tonnes on the previous day.
Total stocks stand at the highest level since 1995 and thereby is leading to underperformance of prices as against other metals.
Cancelled warrant ratio thpugh rebounded from lows continue to remain at lower levels indicating the stocks might continue to witness build up in the near term.
Nickel
Nickel prices ended with gains of 0.8 percent on MCX while it ended largely flat on LME thereby relatively outperforming other base metals.
On London Metal Exchange, nickel stocks witnessed draw-down of 606 tonnes as against increase of modest 108 tonnes on the previous day.
Open interest however rose marginally indicating long build-up.
Zinc
Zinc was the top loser among the base metal pack as it ended with losses of close to two percent.
Zinc stocks declined by 375 tonnes as against decline of 250 tonnes on the previous day on the previous day on London Metal Exchange.
On the fundamental front, concerns about supply disruption from world’s second largest metal producer Peru eased as the port resumed operations which was closed owing to strike.
