Strength in the US dollar coupled with choppy sentiments in the global markets led base metals to trade lower on the LME on Wednesday, with copper being an exception. Additionally, escalating worries with respect to Europe’s debt crisis, with Greece being the matter of concern, also exerted further downside in the metal prices yesterday.
Copper
Copper prices touched a 20-month high today on news that the Chinese government pledged to support first-time homebuyers in China. The country is the world’s largest consumer of copper which is used in pipes and wires and the People’s Bank of China said yesterday that the government will boost affordable-housing construction.
Additionally, continuous decline in copper inventories on the LME warehouses also acted as a positive factor for prices.
Inventories declined around 1.1 percent to 316,350 tonnes on Wednesday and on a weekly basis, stocks dropped by almost 4 percent yesterday from the previous level of 329,300 tonnes on 1st February 2012.
Outlook
On account of mounting worries over Euro Zone debt crisis coupled with dollar strength, we expect base metals to trade with a negative bias today. Additionally, unfavorable economic data from China will also exert further downside pressure on prices.
In case of copper, expected rise in copper demand from China will provide support for the red metal prices today.
Courtesy: Angel Commodities
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