The base metal complex ended lower after gaining for six consecutive sessions. Lead was the top loser ending lower by about 2%. Aluminium continued to outperform on the down side and ended flat
Inventories at LME for most of the base metals continued to decline and the cancelled ratio has also increased indicating an increase in physical demand
Euro was trading in positive for most of the day but gave up all its gains by the end of the day, as European equities trimmed their gains. The Dollar index also ended flat after moving back and forth in a narrow range
From the economic data front, US consumer confidence came in lower than expected and the Richmond Fed Manufacturing Index was also lower than the prior numbers
In India, RBI raised the Repo rate by 25bps to 5.75% and Reverse Repo rate by 50bps to 4.50%, while left the CRR unchanged. Inflation concerns dominated the policy stance rather than the economic growth
OUTLOOK
US equities ended flat and gave up all the intraday gains after the consumer confidence data came in lower than expected. Asian equity markets are moving higher after opening on a mixed note.
Both the Euro and the Dollar index are trading flat and the Indian rupee is showing weakness after appreciating by about 30 paisa yesterday
On the industry front, Xstrata reported a fall in copper output by 3% in the first half of 2010. As per Norwegian producer Norsk Hydro the aluminum market outside China was in a surplus of around 1 million metric tons on an annualized basis in the second quarter of 2010
On economic data front, the US durable goods orders data is due to be released which is expected to show a positive growth after contracting in the month of May
Overall, we at KCTL expect the base metal prices to slightly bounce back given the support from strong Asian equities, depreciating rupee and expectation of positive economic data
