On a weekly basis, base metal prices delivered a mixed performance on the LME with copper, zinc and tin ending in red, while nickel and lead closing in the green.
Prices came under pressure mainly on the back of stronger dollar, China’s move to increase margins on commodity futures to curb inflation and concerns with regard to the debt issues in the Euro Zone.
The DX, tracking the performance of the greenback against a basket of six currencies gained around 2.4% w-o-w, touching a two-month high of 80.60 on Friday.
But, losses on the MCX were slightly less on the back of depreciation in the Indian Rupee. Spot Rupee depreciated more than 2% to close at 45.82 on Friday.
Nickel was the top gainer on the LME as well on the MCX last week. Prices touched a high of $22875/tonne on the LME.
Despite a strong dollar and rising inventories, metal prices moved higher mainly on the back of report from the World Bureau of Metal Statistics (WBMS) which indicated that nickel market experienced a deficit in the first nine months of the current year.
Demand for nickel exceeded the supply by 41,000 tonnes in the period between Jan-Sep 2010.
As per the data, global demand increased by 119,000 tonnes in the same duration.
Zinc was the worst performer last week, as the metal prices touched a low of $2080/tonne on the LME. Prices declined mainly on the back of dollar strength and surplus of the metal in the market, as reported by the ILZSG.
According to the report, global zinc market experienced surplus of 175,000 tonnes in the first nine months of the current year. Global zinc consumption reached 9.285 million tonnes while the world refined zinc production rose to 9.460 million tonnes in 2010.
On the MCX, the metal prices declined by 2.2% to close at `96.75/kg last week.
Outlook
We expect base metal prices to take cues from movement in the dollar today. Strength in the DX and concerns with regard to the debt issues in the Euro Zone will also exert downside pressure on metal prices.
