After consolidating for most of the day, base metal prices ended higher on the back of better than expected ISM non-manufacturing composite data from US.
US equities ended higher on the back of better than expected economic data. Taking cues most of the Asian equities are trading higher. In the morning session on LME, base metals are trading slightly on the lower side.
On the economic data front, factory orders from Germany are expected to witness a positive growth after declining in the prior month. ECB is expected to maintain status quo on interest rates, however the market will be eyeing any other significant announcements that may come.
From US, initial jobless claims data is expected to come in lower indicating improving economic conditions. Overall, we at KCTL expect the base metal prices to consolidate but the bias continues to remain on the positive side given the expectation of strong economic data.
ALUMINIUM
LME inventory witnessed a build-up of 1,225 tonnes
The basis on LME continues to remain at lower levels indicating that upside in prices might be capped in the near term
COPPER
Copper inventory witnessed draw-downs of 125 tonnes on LME
On the fundamental front, union workers at the mine jointly owned by Anglo-American and Xstrata in Chile are likely to reject an offer to start early wage negotiations. The mine produced 535,000 tonnes of copper in 2009, equivalent to 3.3% of the total World’s produce
The open interest is also increasing , after declining for the past few days, indicating build-up of long positions
LEAD
LME inventory witnessed build-up to the extent of 125 tonnes. The cancelled warrant ratio is stabilizing after falling from higher levels
The basis on LME is slowly moving higher, indicating that prices might move higher in the near term
On the fundamental front, the data from Indian automobile companies indicate robust demand
NICKEL
LME inventory witnessed draw-downs to the extent of 288 tonnes
The open interest in both Aug and Sep contracts have declined indicating there has been profit-booking at higher levels
The decline in contango is indicating that price rise in the near term might be capped
ZINC
Zinc was the top performer among the base metal pack as it is catching up with the gains witnessed by Lead in the past few days
LME inventory for Zinc witnessed draw-downs of 700 tonnes
The cancelled warrant ratio is ticking upwards indicating draw-downs may be witnessed in the near term
