Base Metals Settle Lower On Pending US Home Sales Data

Base metal prices gained by nearly 0.06 to 1.9 percent, as pending home sales along with Dallas manufacturing exceeded the expectted supporting price gain. Nickel was the only loser, and prices came down slightly as global equities retreated slightly.

This morning, base metals are trading positive by 0.04 to 0.58 percent apart from Lead. After two consecutive days of gains. Lead prices are witnessing pressure probably due to profit booking as fundamental sentiments remains intact.

Asian equities are also trading mixed, with Japan and China in the red zone as Japanese retail sales and Chinese reforms are under contraction at present. The metals pack is following eurozone developments and improved US releases. Standard and Poor’s has downgraded Greece to selective default from CCC to C, and this may weigh on gaining euro limiting gains in metals.

Eurozone confidence figures are also expected to be mostly mixed, and might also continue to pressurize European equities. Metals may open positive, but pressure on prices may be felt during the European session.

Late this evening, US data releases in the form of consumer confidence and Richmond fed manufacturing are expected to increase supporting metal prices. A sharp fall in the Durable goods order may have a slight negative effect. Generally, metals could continue to follow a bullish trend, as the euro may end up positive due to increased economic confidence coupled with German CPI.

We recommend initiating long position at lower levels for today’s trading session, as better economic releases from US and eurozone may continue to support gaining spree.

Aluminium

Aluminum prices rose by 0.17 percent at LME while at MCX prices gained 0.84 percent.

Fundamentally, the rise in cancelled warrant indicates rise in spot demand and that could continue to support prices for the day.

Deteriorating eurozone confidence could limit gains. Prices are expected to remain mostly range bound in today’s session.

Copper

Copper prices gained slightly - by 0.06 percent at LME while prices came up by 0.84 percent at the MCX.

Demand for copper is likely to be strengthening from US to China; stockpiles monitored by the world’s biggest metal exchange are at a two and half year low and are supported by cancelled warrants.

Prices may remain bit volatile as skepticism still hovers the market regarding the eurozone, and futures are quoting lower than spot.

Lead

Lead was the top gainer for the second day running, and at the MCX prices gained 1.90 percent while at LME gains of 1.77 percent was witnessed.

Fundamentally, a decline in inventory could have emerged as a supportive factor for prices. Warrants have declined, indicating a weak demand. The Contango effect is also marching southwards, indicating weak future demand. This would indicate that a buying position should be initiated at lower levels for the day.

Nickel

Nickel was the only loser, and prices came down by 0.10 percent at LME while gains of 0.77 percent were witnessed at Indian markets.

Nickel warrants declined indicating weak demand. In today’s session, prices are expected to mostly remain range bound due to weak steel and infrastructure demand.

The Contango effect is marching northwards, indicating supply side constraints from manufacturers limiting price gain.

Zinc

Zinc followed other base metals and prices gained by more than a percent at MCX.

Fundamentally, Zinc is the pack weakling, as stocks continue to stockpile coupled with weak spot demand.

Prices may continue to remain weak, as the Contango effect is also marching southwards, indicating weak future demand. Positions at lower levels could be initiated in anticipation of better US economic data releases.