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Commodities Industrial Metals

Industrial metals (copper, aluminium, nickel, etc.) daily review (February 03, 2014)

February 3, 2014, Monday, 05:10 GMT | 00:10 EST | 09:40 IST | 12:10 SGT
Contributed by Angel Broking


Base Metals
 
Base metals on the LME traded on a negative note last week taking cues from negative economic data from the US. Also, strength in the DX after QE taper of $10 billion along with weak global market sentiments acted as negative factors.
 
Further, mixed economic data from the Euro Zone and unfavorable manufacturing data from China exerted downside pressure on prices.
 
In the Indian markets, base metals traded lower despite Rupee depreciation.
 
 
Copper
 
LME Copper slumped by around 2 percent last week on the back of unfavorable data from the two biggest consumers, the US and China. Also, mixed economic data from Euro Zone along with weak global market sentiments exerted downside pressure on prices.
 
Further, announcement of QE taper of $10 billion by the Federal Reserve in its meeting last week led to strength in the DX and thereby acted as negative factor for prices of the metal. Decline in inventories by around 4 percent could not prevent downside movement. The red metal touched a weekly low of $7033.5/tonne and closed at $7043/tonne on Friday.
 
In the Indian markets, the metal declined by 2.3 percent thereby touching a weekly low of Rs.444.2/kg and closed at Rs.444.95/kg on Friday.
 
 
Outlook
 
We expect base metals prices to trade lower on the back of negative manufacturing and non-manufacturing data from China. Further, expectations of drop in manufacturing activity from the US in the evening session will exert downside pressure on the prices. Additionally, weak market sentiments due to QE tapering by the Federal Reserve along with strength in the DX will act as a negative factor. However, sharp downside in the prices will be prevented due to forecast for rise in manufacturing data from the Euro Zone. In the Indian markets, Rupee depreciation will cushion sharp downside pressure in the prices.