After consolidating for initial part of the day, base metal prices tumbled to end the lower with losses of anywhere between one to five percent. Weak physical demand along with concerns about higher oil prices weigh on base metal prices. German industrial production came in higher while the business inventory of US increased.
US equity markets ended flat, largely consolidating in a narrow range as investors await key data releases from US. Most of the Asian equity markets are trading lower with losses of anywhere between half to one percent. China’s trade balance slipped to deficit as against expectation of surplus.
This came on the back of a meager export growth while imports continued to grow at double digit. This is putting modest pressure on base metal prices in the morning session on LME.
Later in the day, Bank of England is expected to keep interest rate unchanged at 0.50 percent however market would be looking at any other announcements that might come in especially after ECB’s indication of rate hike in the previous meet In US, jobless claims are expected to increase along with widening of trade deficit.
All these data are expected to come in modestly negative for the economy and amid this oil prices have increased thereby raising concerns about economic recovery.
On the fundamental front to, demand continues to remain weak as thereby the discount in the spot market is also increasing. All these factors are expected to put continued pressure on base metal prices.
Aluminium
Aluminium prices continue to underperform most of the other base metals and thereby prices declined by a marginal half a percent.
Aluminium stocks on London Metal Exchange witnessed addition of modest 800 tonnes as against decline of 325 tonnes on the previous day.
Open interest rose along with decline in prices indicating build-up of short positions.
Copper
For a second consecutive day, copper stocks on London Metal Exchange declined by 775 tonnes as against decline of 650 tonnes on the previous day.
Total stocks on LME at 425,725 tonnes stands at highest level since July 2010.
On the fundamental front, Group Mexico, whose Cananea copper mine was closed for some years now, owing workers strike, said that it would reach 100 percent production capacity in April. Close to half a million tonnes of output was lost owing to closure.
Lead
Lead prices declined by more than four percent on LME while loss on MCX was limited to the extent of three and half percent.
After marking seven consecutive day’s of decline in stocks lead stocks on London Metal Exchange increased by 475 tonnes.
The cancelled warrant ratio is also witnessing modest decline indicating draw-down of stocks which were previously earmarked for delivery.
Nickel
Nickel stocks on London Metal Exchange witnessed draw-down of 444 tonnes as it marks sixth consecutive decline as against decline of 282 tonnes on the previous day.
Cancelled warrant ratio at 7 percent of total stocks remain at higher levels indicating that stocks might continue to witness draw-down in the near term however this might not translate into price rise as investors are getting concerned about the ongoing tensions and economic recovery.
Zinc
Zinc was the top loser among the base metal pack as it ended with losses of five percent. During the day, it was down by nearly seven percent however it recovered from day’s low.
After increase in stocks by 26,450 tonnes in the past three days, zinc stocks on London Metal Exchange witnessed draw-down of a modest 200 tonnes.
Huge increase in open interest along with higher volumes indicating continued build-up of short positions.
