Base metal prices ended mixed with lead and zinc ending higher while copper and nickel ending lower. Concerns about lower demand from China sent copper prices lower. Equity markets in Asia and Europe ended largely on the higher side. Volumes were however on the lower side.
US equity markets ended with modest gains, largely consolidating in the absence of any key triggers. Key Asian markets like Hong Kong, Chinese and Taiwanese markets are closed today while other markets are trading modestly lower.
Dollar index is currently trading flat, but the bias is on the higher side after Fed Chairman indicated that would act if the inflation turned out to be more than transitory.
In the morning session on LME, base metal prices are trading mixed with slight negative bias. On the fundamental front, reports indicated that huge copper stocks have been bought previously in China to be used as collateral for loans. On the economic data front, PMI numbers from euro zone are expected to come in largely unchanged.
From US, ISM non-manufacturing numbers is expected to come in higher thereby indicating continued robust growth. Overall, given the largely lower equity markets along with concerns about higher stocks, base metal prices might witness some pressure but divergent movement within the pack might continue.
Aluminium
Aluminium prices ended largely flat on both LME and MCX, largely consolidating. Aluminium stocks on London Metal Exchange witnessed draw-downs of 3,375 tonnes thereby marking fifth consecutive decline.
Cancelled warrant ratio continues to remain at average levels thereby indicating that stocks might continue to witness decline in the near term.
Copper
Copper stocks on London Metal Exchange witnessed decline of 950 tonnes as against draw-down of 1,000 tonnes on the previous day.
On the fundamental front, China's biggest metals trading firm, Minmetals Resources offered $6.5 billion to buy Equinox minerals. The target company has copper assets prominently in Zambia and Saudi Arabia.
Lead
Lead stocks on London Metal Exchange witnessed draw-down of 300 tonnes.
Lead market continues to remain in backwardation and the basis on LME remains at $58/tonne indicating strong demand for the metal. This is supporting the metal’s price to trade higher.
On the fundamental front, demand for the metal is expected to remain strong especially from Japan which might use batteries to face power disruptions in the near term.
Nickel
Nickel prices on LME ended lower by 0.4 percent while on MCX losses were more than a percent, thereby leading to underperformance among the base metal pack.
Nickel stocks on London Metal Exchange witnessed draw-downs of 192 tonnes.
The discount in the cash prices have been moving higher and thereby is putting pressure on nickel prices.
Zinc
Zinc prices ended higher with gains of more than a percent on both LME and MCX.
Zinc stocks on London Metal Exchange witnessed net decline of 150 tonnes. Inventory movement however might continue to remain tepid given the lower level of cancelled warrant ratio.
Open interest however declined along with increase in prices indicating short covering which supported prices.
