After trading lower for most part of the day, base metal prices recovered and ended largely higher with gains of anywhere between half to one percent.
Both the BOE and ECB left interest rates unchanged at 0.5 percent and 1.25 percent respectively. From US, jobless claims though rose modestly from prior week; trade deficit came in better than expected thereby supporting base metal prices.
US equity markets ended higher with gains of nearly 0.6 percent thereby ending six consecutive days losing streak. Asian equity markets are trading mixed as Chinese markets trade lower while Japanese markets are trading higher.
Data from China indicated that decline in trade surplus on the back of faster import growth as against export growth. On the fundamental front, copper imports by China, in the month of May declined by 3.02 percent (MoM) to 254,738 tonnes.
Also Codelco, whose operations were impacted because of workers strike, indicated that output would return to full capacity by June 11. Both of these factors are expected to weigh on prices. In the morning session on LME, base metal prices are trading largely flat.
Dollar index is trading modestly lower near 74 levels. On the economic data front, industrial production from UK is expected to remain flat. Import price index from US is expected to decline along with increase in monthly budget statement.
Overall, base metal prices might continue to witness divergent movement; copper prices might continue to remain under pressure.
Aluminium
Aluminium prices ended lower with losses of nearly half a percent thereby underperforming most of the other base metals.
On London Metal exchange, aluminium stocks witnessed draw-downs of 6,950 tonnes as against decline of 7,800 tonnes on the previous day. This marks 11th consecutive draw-down.
On the industry front, Alcoa indicated that current technology would allow for about 20 percent of copper applications to be replaced with aluminum which would be 3.8 million tonnes a year.
Copper
Copper stocks on London Metal Exchange witnessed build-up of 700 tonnes as against increase of 400 tonnes on the previous day.
Stocks have increased for fourth consecutive session and are headed for third weekly net build-up.
On the fundamental front, output in Africa’s largest producer of copper, Zambia dropped to 242,284 tonnes in the first four months of 2011 as against 266,373 tonnes a year earlier.
Lead
Lead prices ended higher with gains of more than a percent on LME while in Indian markets gains were limited to half a percent.
Lead stocks on London Metal Exchange witnessed draw-downs of 25 tonnes as against decline of 150 tonnes on the previous day.
Reports indicated that China has announced a plan to pay up to nearly $2,800 for scrapping old vehicles. This is largely aimed at increasing the automobile sales which have been slumping in the recent past.
Nickel
Nickel was the top gainer among the base metal pack as it ended with gains of more than two percent on LME while on MCX gains were limited to 1 percent.
Nickel stocks witnessed draw-downs of 972 tonnes as against build-up of 18 tonnes on London Metal Exchange on the previous day.
Higher cancelled warrant ratio was indicating drawdowns of stock and given that it remain higher, stocks might continue to draw-downs in the near term.
Zinc
Zinc prices ended lower with losses of nearly 0.35 percent while it ended flat in Indian markets.
On London metal Exchange stocks witnessed drawdowns of 400 tonnes as against -up of decline of 225 tonnes on the previous day.
Basis on LME continues to remain at average levels of $20/tonne thereby giving no clear indication for future price direction.
Courtesy: Karvy Commtrade Ltd.
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