Base Metal prices ended mixed as copper and nickel ended lower while zinc, lead and aluminium ended with average gains of nearly 1 percent on the back of short covering. Weak equity markets, owing to trouble in Japan lead to decline in base metal prices.
US equity markets ended with losses of half a percent as investors remain concerned about the situation in Japan. Most of the Asian equity markets are trading lower and Japanese market have tumbled by nearly 13 percent after reports indicated blast of nuclear reactor in the morning. Dollar index is trading higher by 0.25 percent on the back of risk aversion.
So both weak equity markets and higher dollar index is leading to decline in base metal prices in the morning session on London Metal Exchange. Japan is the World’s third largest economy and given the short term effect on the economy demand might get curtailed in the near term.
On the economic data front, ZEW survey numbers from euro zone are expected to indicate improvement. FOMC rate decision is due to be released today and the expectation is that interest rates would be kept unchanged at 0.25 percent. However any other announcement about the quantitative easing program and economic outlook would be keenly watched.
Overall, given the weak equity markets and wave of risk aversion being witnessed, base metal prices might remain on the lower side, weaker rupee might however limit the losses in Indian markets. Technically however lead and zinc are expected to remain on the higher side.
ALUMINIUM
Aluminium stocks on London Metal Exchange witnessed draw down of 4,550 tonnes thereby marking third consecutive decline
The cancelled warrant ratio continues to remain at higher levels indicating that stocks might continue to witness draw-downs in the near term
Open interest declined by nearly 12 percent along with modest increase in prices indicating short covering which helped prices to end with modest gains
COPPER
Copper stocks on London Metal Exchange witnessed modest build-up of 125 tonnes
Modest increase in stocks was however accompanied by further decline in cancelled warrant ratio thereby indicating that stocks might continue to witness build-up in the near term
On the fundamental front, Mitsubishi Materials Corporation, the third-largest copper maker in Japan, halted operation at its 258,000-metric tonne factory
LEAD
Lead stocks on London Metal Exchange though witnessed modest decline of 100 tonnes, it marks third consecutive decline
Since Japan is facing constraints of power, batteries might be heavily used in the near term and battery industry is the major user industry of lead
The calendar spread on MCX has declined further to 0.15 as against levels of 1 indicating that gains might remain limited in the near term
NICKEL
Nickel prices declined by half a percent on both LME and MCX
Nickel stocks on London Metal Exchange witnessed a draw-down of 438 tonnes as it marks ninth consecutive decline
Open interest rose along with decline in prices indicating build-up of short positions and bias on the lower side
ZINC
Zinc prices gained nearly 2.5 percent on LME while gains on MCX were limited to 2 percent. Open interest declined also declined indicating short covering led rally
Inventory movement of zinc on London Metal Exchange continue to remain tepid as stocks witnessed a modest 150 tonnes of decline
On the fundamental front, Mitsui Mining & Smelting Co., the top zinc producer of Japan, shut its 112,000 tonne capacity of plant owing to recent destructions
