Base Metals Under Pressure On China's Economic Concerns

Escalating tensions with respect to euro zone debt crisis, slowdown in China’s economy and rising uncertainty over global economic growth exerted downside pressure on the base metal prices last week. Weak sentiments in the global markets also acted as a negative factor for prices.

Weakness in the US dollar did not provide any respite to the metal prices. However, depreciation in the Indian currency cushioned sharp decline on the domestic bourses.

Lead

Lead has been the worst performer in the last week, as the metal dropped more than 5 percent on the LME and around 2.7 percent on the MCX. Sharp rise in the metal inventories and weak sentiments in the global markets acted as a negative factor for prices.

On a week-on-week basis, lead inventories rose sharply by around 1.7 percent to 372,875 tonnes on the LME warehouses in the last week.

Lead touched a low of $1979/tonne and ended its trading session at the level of $2005/tonne last week. On a weekly basis, MCX Lead March contract touched a low of Rs101.80/kg and closed at the level of Rs102.7/kg.

Crude Oil Weighs Down On Rising Inventories

On a weekly basis, Nymex crude oil prices declined around 0.2 percent, on the back of increasing worries over global economic growth which in turn escalated concerns over global oil demand.

This acted as a negative factor for oil prices. However, weakness in the US dollar cushioned sharp decline in oil prices.

As per the International Energy Agency, world crude oil market is well balanced as even if, on one hand, the exports of Iranian crude oil will decline by 300,000 million barrels in current month on account of sanctions from European Union and US, but on the other hand Saudi Arabia will produce more than its current capacity which is below 10 million barrels per day. Saudi Arabia has a production capacity of 12.5 million barrels a day.

However, MCX Crude Oil April contract gained by more than 3 percent on account of depreciation in the Indian rupee and closed at Rs5499/bbl last week.

Natural Gas

On a weekly basis, Nymex natural gas prices declined around 2.2 percent on the back of more than expected rise in US natural gas inventories and poor sentiments in the markets. However, further downside in prices was restricted on account of a weaker dollar.

Natural gas prices touched a low of $2.250/mmBtu during the week and closed at $2.273/mmBtu on Friday. On the MCX, gas prices increased almost 0.9 percent on account of a weaker Rupee and touched a high of Rs.122/mmBtu last week.

Precious Metals Edges Higher On Weak Us Dollar

Spot gold prices increased slightly around 0.1 percent in the last week on the back of weakness in the US dollar, as a weaker dollar makes dollardenominated commodities look attractive for holder of other currencies.

However, sharp gains were capped due to weak sentiments in the global markets. Additionally, fall in crude oil prices also affected the inflationled demand for gold last week.

On a week-on-week basis, the yellow metal touched a high of $1669/oz and ended its trading session at the level of $1661/oz on Friday.

However, MCX Gold April contract rose around 1 percent on account of a weaker Rupee and hit a high of Rs28,145/10 gms in the last week.

Silver

Silver being an industrial metal took cues from downside in base metals and spot silver prices declined sharply by more than 1 percent in the last week. However, further downside was cushioned on account of a weaker dollar.

The white metal touched a low of $31.06/oz during the week and ended its trading session at the level of $32.18/oz on Friday. On the MCX, Silver May contract slipped around 0.1 percent and touched a low of Rs55,901/kg last week.