Base Metals Settle Higher on Positive Global Economic Policies

European leaders announcement of measures in the form of 50 percent cuts on the Greek bonds, banks recapitalization plan along with continued bond buying measures supported metal prices.

Base metal prices ended higher with gains of anywhere between three to six percent as strong euro along with positive GDP numbers from US sent markets higher.

Euro ended with gains of 2 percent and the US GDP numbers indicated that the economy grew by 2.5 percent in the third quarter.

US equity markets ended higher with gains of nearly 3 percent supported by measures announced by Europe and positive GDP numbers along with personal consumption. Taking cues, most of the Asian equity markets are also trading higher with gains of nearly a percent.

Japan’s industrial production numbers indicated contraction of 4 percent in the month of September. This is weighing on the metal prices in the morning session on London Metal Exchange as they trade lower with cuts of half to one percent.

Euro is though declining slightly but overall the bias is still on the positive side. On the economic data front, US personal income and spending are expected to come in better in the month of September along with boost in the Michigan confidence measure. Indian rupee appreciated by 1.5 percent as markets open after a gap of two day and thereby this might limit the upside for metal prices in Indian markets.

Overall, base metal prices might open on the lower side owing to appreciating rupee and weak industrial production numbers from Japan. However given the expectation of better economic data from US along with largely higher equity markets, base metal prices are expected to recover.

Aluminium

Aluminium prices ended higher with gains of nearly two percent on LME while it ended largely flat in Indian markets.

Aluminum stocks on London Metal Exchange witnessed draw-downs of 2,250 tonnes against a decline of 1,850 tonnes on the previous day.

This marks seventh consecutive day of draw-downs of stocks and even on a weekly basis they are headed for net draw-downs thereby reversing previous week’s build-up.

Copper

Copper prices rallied and ended higher with gains of nearly 6 percent on LME while in Indian markets it ended with gains of nearly 3 percent.

Copper stocks on London Metal Exchange witnessed draw-downs of 2,750 tonnes as against decline of 1,725 tonnes on the previous day.

On the fundamental front, Freeport's Grasberg mine in Indonesia declared force majeure owing to workers strike and given the concerns about the Euro zone abating, focus has now shifted back to the supply tightness.

Lead

Lead was the top gainer among the base metal pack as it ended with gains of more than six percent.

Lead stocks on London Metal Exchange witnessed modest decline of 100 tonnes as against build-up of 325 tonnes on the previous day.

After moving higher for four consecutive day’s, cancelled warrant ratio is now stabilizing at close to 5 percent of total stocks indicating modest build-up or even draw-downs might be witnessed in the near term.

Nickel

After draw-downs of 240 tonnes on the previous day, nickel stocks on London Metal Exchange witnessed build-up of 540 tonnes.

As was indicated previously, cancelled warrant ratio continues to remain at average levels of 7 percent of total stocks thereby giving no clear indication about inventory movement.

Open interest increased by nearly 30 percent along with cut in prices but wide movement during the day is not giving any clear indication about the bias on the long or short positions side.

Zinc

Zinc prices ended higher with gains of nearly 5 percent on LME while in Indian markets it ended with gains of 2 percent.

Zinc stocks on London Metal Exchange witnessed draw-downs of modest 625 tonnes as against decline of 2,225 tonnes on the previous day.

Open interest declined by nearly 10 percent along with increase in prices indicating unwinding of short positions thereby pushing prices higher.