Base Metals like other commodities were also on a rollercoaster ride in the last year. Strong growth shown by China, major consumer of base metals, led to sharp rise in metals like copper, lead, nickel, Zinc till the mid of the year 2008. Prices started climbing as restocking by metal traders, rise in industrial activity supported metal prices.

Copper, the leader of base metal pack, touched an all time high of $8930 in first week of July as rise in construction activity supported red metal. Nickel prices started the year on positive note, but could not hold on to its gain. Fall in Steel demand put pressure on Nickel prices. Prices are trading at multiyear low.

Zinc was trading on weak note as rising inventory and heavy surplus from the beginning of the year weighed on metal prices. Lead prices succumbed to the pressure of global financial turmoil, as fall in demand for batteries put breaks on demand for this metal. Lead prices have fallen by more than 75% from its highs.

Since, Aluminum is energy intensive metal, fall in oil prices put downward pressure on aluminum prices. The combination of destocking and companies adjusting for the deteriorating economic outlook has lead to a freefall in base metal prices, but the rate of fall does now seem to be slowing with a number of metals turning sideways or even trying to edge higher.

China along with other industrialized countries have announced stimulus package to bolster their economy. We believe, that all these efforts will impact global economy after second half of 2009, after which demand for base metals can rise, prompting recovery in Base metal prices in the coming year.

We expect Copper prices to remain Bearish in the first half of 2009 and will trade in the range of Rs. 120/ kg to Rs. 200/kg in domestic markets and $ 2,500 / tonne to $ 4,400 / tonne at LME. In the latter half of the year, the prices may tend to get support from the economic packages announced by various Governments and we expect to trade in the range of Rs. 150 / kg to Rs. 250/ kg in Indian markets and $ 3,000 / tonne to $ 5,000/ tonne at LME.

Zinc prices likely to trade in the range of $ 950 / tonne to $ 2,500 / tonne at LME and Rs. 45 / kg to Rs. 120 / kg. Nickel prices would be tied to the fate of Steel industry and we expect the prices to trade in the range of $ 8,500 /tonne to $ 20,000/tonne at LME and Rs. 400 / kg to Rs. 960 / kg in domestic markets.

Courtesy: Angel Commodities

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