Base metals Base Metal prices ended mixed to largely flat on the back of weak equity markets and concerns about economic recovery. Equity markets ended lower with losses of anywhere between one to two percent as concerns about economic recovery weighed on prices.
However concerns on the supply side supported prices thereby limiting the downside. US personal income rose by less than expected and personal spending contracted indicating that the economy would continue to remain weak. Dollar index ended higher with gains of 0.4 percent.
US equity markets ended lower with losses of more than two percent as concerns about economic recovery weighed on prices. Taking cues most of the Asian equity markets are also trading on the lower side. Dollar index is trading largely flat near 74.5 levels.
In the morning session on LME, base metal prices are trading modestly higher. On the economic data front, Chinese non-manufacturing numbers of the July month came in much higher than expected. From the Euro zone, PMI numbers are expected to come in largely unchanged.
From US, ADP employment report is expected to indicate slower job additions and factory orders might have contracted in the month of June. ISM non-manufacturing numbers would be keenly watched after weak manufacturing numbers released in the prior week.
Overall, base metal prices are expected to remain quite volatile as supply concerns support prices while weak economic data would weigh on prices.
Aluminium
Aluminium prices ended largely flat on LME while it ended modestly lower on MCX.
Aluminium stocks from London Metal Exchange witnessed draw-downs of 8,125 tonnes as against decline of 7,650 tonnes on the previous day.
On the fundamental front, China's spot alumina prices have increased by 7-9 percent since June due to increased demand. Alumina is the material used in manufacturing of aluminium.
Copper
Copper prices ended higher with gains of 0.3 percent on LME however in Indian markets prices ended largely flat.
Copper stocks on London Metal Exchange witnessed draw-downs of 400 tonnes as against decline of 525 tonnes on the previous day.
On the fundamental front, strike at Escondida mine in Chile continues however reports citing union leader indicated that negotiations were on the right path to end the conflict.
Lead
Lead stocks from London Metal Exchange witnessed build-up of 75 tonnes as against draw-downs of 775 tonnes on the previous day.
On the fundamental front, automobile sales in US in the month of July came in higher than expected and the prior month. Automobiles is the major user industry of lead.
Open interest declined only modestly while prices ended largely flat on lower volumes.
Nickel
Nickel was the top performer among the base metal pack as prices ended with gains of more than a percent on LME and nearly half percent on MCX.
Nickel stocks from London Metal Exchange witnessed draw-downs of 156 tonnes as against build-up of on the previous day.
Cancelled warrant ratio has also moved higher along with decline in stocks indicating drawdowns might be witnessed in the near term.
Zinc
Zinc prices underperformed the entire base metal pack as prices ended lower with losses of nearly a percent on both LME and MCX.
Zinc stocks from London Metal Exchange witnessed declined by a modest 25 tonnes as against drawdowns of 225 tonnes on the previous day.
The lead-zinc spread now stands at 6. Higher auto sale numbers from US might support prices of lead in the near term and thereby spread might now move higher.
Courtesy: Karvy Commtrade Ltd.
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