Base Metals Settle Lower on Euro Debt Concerns

The base metals complex traded lower on the LME in yesterday’s trading session as uncertainty over Euro Zone debt crisis still persists and this acted as a negative factor for metals. However, weakness in the US dollar resisted further decline on Thursday.

Copper

Copper, the leader of the base metals pack, declined around 0.2 percent on the LME as well as on the MCX on Thursday. However, sharp downside on the international markets was cushioned on the back of drop in the metal’s LME inventories coupled with a weaker dollar.

Nickel

Nickel prices declined by more than 1 percent on the LME on Thursday, mainly taking cues from sharp rise in the metal inventories on the LME warehouses. Nickel inventories increased sharply by 2.2 percent to 97,770 tonnes yesterday.

The metal touched an intra-day low of $19,764/tonne and closed at the level of $19,990/tonne on Thursday. On the MCX, Nickel February contract declined around 0.6 percent yesterday and touched an intra-day low of Rs985.10/kg.

Crude Oil Edges Higher On Positive Us Economic Data

Crude oil prices closed higher on Thursday by 0.5 percent on the Nymex and around 1 percent on the MCX. With positive economic data releases from the US coupled with building tensions over Iran supported upside in the commodity.

On 15th Feb’12, Iran said that it would cut crude shipments to France and the Netherlands and has also loaded locally built fuel plates into its nuclear research reactor in Tehran.

Alongside, tensions over supply disruptions rise as the EU has announced last month that it will halt purchases of crude oil from Iran beginning July 1. But at the same time, to ease fears and worries over supply, Saudi Arabian Oil Co. plans to re-open its Damman oilfield and start production there for the first time in 30 years.

Supplies of crude oil from Iran to India may face hurdles as shipping companies may refuse to carry the country’s oil because they may not get international insurance cover following European Union sanctions against Iran announced on 23rd Jan’12.

It is known that Indian shipping companies take protection and indemnity cover (P&I) mainly from European P&I clubs, which have informed these companies that they may withdraw protection once the European sanctions get implemented.