Base metal prices retreated yesterday after trading mostly in gains as Greece debt-talks paused without an agreement on austerity measures.
The troika asked for detailed information of pension cuts and asked Greece to fulfill the requirements before Feb. 13 to complete the 130 billion euro bailout. Metal prices retreated by 0.07 to 1.3 percent apart from Copper, however at MCX metals posted slight gain as Indian rupee depreciated by 0.13 percent against greenback.
Today morning base metals are trading mixed at LME. Nickel and Lead are trading negative by 0.23 percent whereas other base metals are trading slight positive. Mixed trend in metal prices are witnessed probably because of weak economic data from Asia coupled with dampening hopes of austerity from Euro-zone.
Early morning, Japan’s core machinery orders dropped 7.1 percent and Chinese inflation unexpectedly increased to 4.5 percent weighing on metal prices.
The Asian equities are also trading weak due to the same reason and may continue the trend for the day. From the Euro-zone, though Greece have still not fulfilled all criteria for austerity but still the ECB has agreed to exchange Greek bonds at less than face value to further reduce debt-load.
The ECB is also expected to announce the interest rate where chances of reducing the rate may be anticipated in a move to further reduce the debt-burden on member nations.
Therefore we may expect Euro to remain mostly subdued during the day however in the evening session Euro may regain strength due to interest rate announcements. Manufacturing production from UK is expected to increase and hence BOE may unchange interest rate. From US, wholesale inventories are expected to increase further due to increased manufacturing and lower producer price index.
The jobless claims may also continue to contract slightly after better unemployment and payrolls data. All these may continue to strengthen the Dollar for the day. Hence due to concerns regarding Greek talks and shallow equities, metals may remain weak during the day. However chances of pullback may be witnessed as the ECB announces interest rate supporting the Euro.
ALUMINIUM
Aluminum prices retreated slightly by 0.07 percent at LME
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
Moreover with low gain in prices when compared to Copper, Aluminum is gradually substituting Copper for wire by manufacturers may also support price gain
COPPER
Copper prices continued the gaining spree and at LME it gained 1.17 percent and at MCX prices came up by 0.87 percent
Fundamentally, the Chinese demand has been weakest since 2006 and subsidy programs have also ended for metals reducing their consumption demand may impact negatively on prices
Copper may trade range bound during the day, however slight gain might occur during evening session
LEAD
Lead prices retreated at LME by 0.23 percent while at MCX prices gained 0.14 percent
Lead has been fundamentally looking strong and with progress in Euro-zone after better US economic developments, prices may continue the gaining spree
However today prices may retreat due to fall in volumes and open interest along with weak cancelled warrants
NICKEL
Nickel prices retreated by 1.38 percent at LME and it came down by 0.52 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 along with increasing supply disruptions
ZINC
Zinc prices came down by 0.24 percent at LME, however prices gained slightly by 0.14 percent at MCX
Inventories have witnessed stockpiling and cancelled warrants have declined for the fifth 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.
Looking for Agri Research? Visit research.commodityonline.com
