Base Metals Settle on Mixed Trend, Copper Surges on Firm Demand

Ahead of the crucial European summit announcement, volatility continued to rule the metals market as they ended mixed. Copper and Zinc ended with gains of close to a percent while the other metals ended lower with cuts of anywhere between one to three percent.

Durable goods orders from US indicated contraction while the new home sales indicated some improvement in the month of September. Currency markets largely remained range bound as dollar index ended with modest gains.

US equity markets ended with gains of 1.4 percent as optimism that the European nations would come out with some measures supported markets.

Early in the morning, European leaders announced that Greek bond holders might have to take 50 percent losses in the Greek debt and boosted the quantum of rescue fund to 1 trillion Euros.

Measures also included bigger role of IMF, commitment from Italy to take further measures to reduce its debt and ECB’s continued bond purchasing program. All this is boosting sentiment and thereby most of the Asian equity markets are trading higher.

In the morning session on LME, base metals prices are trading Dollar index is trading modestly lower tad below the 76 levels. On the economic data front, confidence numbers from Euro zone are expected to come in weak.

From US, GDP numbers for third quarter are expected to come in higher along with personal consumption numbers. Pending home sales are expected to come in higher. Overall, base metal prices are expected to remain on the higher side.

Aluminium prices ended lower by nearly half a percent on London Metal Exchange thereby paring most of its intraday gains ahead of the crucial European summit.

Aluminum stocks on London Metal Exchange witnessed draw-downs of 1,850 tonnes as against decline of 2,525 tonnes on the previous day.

Cancelled warrant ratio remains steady at close to 4.8 percent of total stocks but draw-downs might continue in the near term.

Huge volatility was witnessed as copper prices ended with gains of nearly 2 percent thereby reversing previous day’s losses.

Cancelled warrant ratio has moved further higher in the past two days and currently stands at close to 14 percent of total stocks indicating that draw-downs might continue in the near term.

On the fundamental front, Freeport's Grasberg mine in Indonesia declared force majeure owing to workers strike.

Lead prices ended lower with cuts of nearly 2 percent on London Metal Exchange.

Lead stocks on London Metal Exchange witnessed build-up of 325 tonnes as against draw-downs of modest 125 tonnes on the previous day.

Cancelled warrant ratio of the metal has moved higher and currently stands at close to 5 percent of total stocks as against sub 1 percent in the past few days, indicating draw-downs might be witnessed in the near term.

Nickel was the top loser among the base metal pack as it ended lower with cuts of more than three percent on London Metal Exchange.

Nickel stocks on London metal Exchange witnessed draw-downs of 240 tonnes as against increase of 102 tonnes on the previous day.

Cancelled warrant ratio continues to remain at average levels of 7 percent of total stocks thereby giving no clear indication about inventory movement.

Zinc prices ended higher with gains of 0.7 percent on London Metal Exchange.

Zinc stocks on London Metal Exchange witnessed huge draw-downs of 2,225 tonnes as against decline of modest 300 tonnes on the previous day.

Basis has remained largely at the average levels of $25/tonne thereby giving no clear indication about future price movement.