NEW YORK (TheStreet) - Base metals rallied strong in early hours Wednesday. During the day, base metals are expected to attain fresh highs, although gains could be limited due to dismal macroeconomic data. July industrial production and retail sales data from China showed slower growth compared to the earlier month.
Economic data releases lined up for the day include trade balance for June, which is estimated to come in at a deficit of $42.3 billion, tracking the earlier levels. In addition, monthly budget statement for July is forecast negative at $169 billion, as compared to the earlier month's negative $180.7 billion.
The Federal Open Market Committee's rate decision came in at 0.25% Tuesday, comparable to earlier levels and in line with market estimation. Meanwhile, the Federal Reserve downgraded its economic outlook on fears of a double-dip recession.
Copper
Copper for three-month delivery increased 0.8% to $7,359 on the London Metal Exchange (LME) after China's trade and housing data buoyed market sentiment, as demand from the country is not expected to erode sharply. Additionally, the Fed's assurance of taking additional steps to spur growth cushioned metals prices. LME copper inventories declined 2,100 tonnes to 408,375 tonnes Tuesday. Copper faces support at $7,283 and resistance at $7,362.
With industrial production growth at 13.4% year-over-year, China's production remains strong, and the country's commodities' demand could remain strong. However the price spread between copper traded in Shanghai and London may widen as China's curbs on property transactions, according to Bloomberg.
Southern Copper(SCCO), which closed at $30.43 in the previous trading session, finds support at $29.89, while resistance lies at $30.80 after which it is seen crossing $31.16. Meanwhile, Freeport-McMoRan(FCX) closed at $73.21 with support and resistance at $72.34 and $73.95, respectively. Teck Resources(TCK) closed at $34.93 with support at $34.30 and resistance at $35.47.
Aluminum
Aluminum for delivery within three months edged up 0.2% to $2,175 per tonne on the LME. The metal's LME inventories fell 5,175 tonnes to settle at 4.39 million tonnes Tuesday. Aluminum finds support and resistance at $2,169 and $2,179, respectively.
Novelis, a leading global producer of aluminum rolled products based on shipments, announced results for the quarter ended June 30. The company reported a decline in net profit to $50 million from $143 million due to a mismatch in realization of derivatives. However, net sales surged 29% to $2.5 billion and shipments were up 15% to 746,000 tonnes. Looking ahead, the company foresees strong demand for flat-rolled aluminum products.
