Base Metals Settle Higher On Euro Debt Concerns

The base metals complex traded higher on the LME on Tuesday as European leaders reached an agreement on a 130 billion Euro bailout for Greece and led to weakness in the US dollar. A weaker dollar makes dollar-denominated commodities look cheaper for the holders of the other currencies.

Copper

Copper gained around 2.3 percent on the LME and almost 2 percent on the MCX on Tuesday. Weakness in the US dollar coupled with the news that Greece reached an agreement on second bailout helped rise in copper prices.

The red metal touched an intra-day high of $8470/tonne and ended at $8451/tonne yesterday. On the MCX, Copper February contract touched an intra-day high of Rs416/kg and ended at the level of Rs415.7/kg on Tuesday.

Japan copper cable shipments down 1.2 pct (y-o-y) in January According to the data from the Japanese Electric Wire and Cable Makers' Association, Japan’s copper wire and cable shipments declined by 1.2 percent (y-o-y) to 56,000 tonnes in the month of January.

The demand was weak due to fall in demand from utilities and electronic parts makers and other exporters. The January level also witnessed a decline of 4.7 percent from 58,711 tonnes in December.

Positive Momentum In Crude Oil On Greece Bailout

Nymex crude oil prices increased by 2.5 percent yesterday after the second bailout package of 130 billion Euros was announced for Greece coupled with supply concerns from Iran. Additionally, a weaker dollar also acted as a positive factor for the commodity.

Oil prices touched an intra-day high of $106.07/bbl and closed at $105.8/bbl on Tuesday. On the MCX, crude oil prices increased by 0.1 percent and closed at Rs.5219/bbl after touching an intraday high of Rs.5240/bbl yesterday.

API Inventories Forecast

The American Petroleum Institute (API) is scheduled to release its weekly inventories today and crude oil inventories are expected to increase by 1.5 million barrels for the week ending on 17th February 2012.

Gasoline stocks are expected to rise by 0.3 million barrels and distillate inventories are expected to decline by 1.1 million barrels for the same week.