Base metal prices gained yesterday as Greece progressed in its debt negotiations by opting fiscal consolidation ahead of second bailout on March 20.
The Euro rallied 1 percent against the USD extending gains to all financial markets along with base metals. Copper and Zinc prices remained bearish due to continued weak Chinese demand and market surplus.
Today morning base metals are trading mixed at the LME electronic platform. Aluminum and Nickel are trading slightly negative, whereas the others have been trading with gains. Asian equities have been also trading positive drawing cues from the gaining US and European equities.
Chinese metal demand has remained subdued even after last month’s holidays and probably it has resulted in mixed metals performance. However from the Euro-zone, Greece has agreed to increase fiscal deficit control by laying-off 15 thousand public sector jobs along with wage cut. Even private creditors have agreed to accept 3.6 percent on 30 years Greece bonds.
All these positive news may continue to support financial markets and Euro is expected to remain stronger for the day. Fundamentally, automobile forecast remains robust and mining giants continued with mergers to utilize the huge cash-piles.
All these may contribute positive sentiment and may support gaining metal prices. From the economic data front, Japan trade balance has widened to an annual deficit of almost half a century but still the Nikkei is trading in gains indicating weak impact on metal prices. Later during the day, German trade balance deficit is also expected to widen due to increased imports and fall in exports.
This may impact negatively on the Euro and may pressurize base metal prices. However positive news from Greece negotiations may continue to shower gains for the day. Overall we expect base metals to continue to remain bullish due to better equities coupled with Euro-zone recovery.
ALUMINIUM
Aluminum prices gained 1.44 percent at LME and it came up by 1.62 percent at MCX
NALCO India’s biggest state-owned Aluminum producer posted more than 80 percent decline in third quarter profits due to fall in prices coupled with high energy costs
Alcoa is reducing its smelting capacity by closing operations at yet another smelter in Victoria in Australia citing higher energy costs and strong Aussie with low metal prices may support price gain for the day
COPPER
Copper prices continued the bearish trend though most of the metals recovered after progress of the Greece rescue deal. At MCX prices gained slightly by 0.57 percent
Fundamentally, the Chinese demand has been weak and coupled with euro-zone crisis are pressurizing price gain
However today, Copper prices are expected to gain due to stronger Euro coupled with buoyant equities
LEAD
Lead prices came up by 0.23 percent at LME while at MCX prices came up by 0.52 percent
Volumes and open interest have improved compared to earlier sessions and hence the present bullish trend is expected to continue for the day
Lead has been fundamentally looking strong and with progress in Euro-zone after better US economic developments, prices may continue the gaining spree
NICKEL
Nickel prices also continued to gain in yesterday’s trading session and prices came up by 0.48 percent at LME and by 0.67 percent at MCX
Supply constrains has added after BHP closed entire operation at 5 Nickel mines at Sudbury and spot demand increased
Prices may continue to gain due to higher auto forecast from Toyota and Honda along with increasing supply disruptions
ZINC
Zinc prices came down by 0.49 percent at LME, however prices gained slightly by 0.14 percent at MCX
Inventories have witnessed stockpiling and cancelled warrants have declined for the fourth consecutive day indicating weak spot demand
Prices are expected to mostly remain sideways due to weak spot demand, however better automobile forecast may continue to support downside
Courtesy: Karvy Commtrade Ltd.
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