Commodities

Industrial metals (copper, aluminium, nickel, etc.) daily review (February 04, 2013)

Contributed by Angel Broking

Base metal prices remained in green in the last week on account of favourable data from US, Euro region and China showcasing that the economi es are on the path of recovery which might translate into increased demand for the industrial metals. Weakness in the DX also added to the gains in the base metals prices. Appreciation in the rupee capped gains in the MCX base metal prices.

Copper

Copper prices gained 3.3 percent week on week on account of favourable data from the US and Euro zone which showcased growth in the major consuming nations. US manufacturing and employment data indicated growth thus erasing concerns of slowdown. U S employment grew on a slower pace in January 2013 but gains in the prior two months (November and December2012) were revised higher than earlier reported. Manufacturing data in US hit nine month high in January. These factors supported an upside pressure on the copper prices on LME. Weakness in the DX also acted as a supportive factor for the copper prices in the last week. However, rise in the Copper inventories at LME warehouse restricted sharp gains.

Prices also gained due to optimism amongst market participants after US Fed eral Reserve said that they might continue with the bond buying program until jobs data improves in the nation.

Copper price s on LME touched a weekly high of $ 8,318 per tonne and closed at $8,310 per tonne on Friday. In the domestic markets MCX copper gained 1.74 percent and closed at Rs. 444.2 per kg on Friday. Firmness in the international copper prices pushed prices upwards. Appreciation in rupee capped gains in the copper prices on MCX. Copper prices on MCX touched a weekly high of Rs. 444.9 per kg.

LME copper inventories gained 10.26 percent week on week and stood at 376,000 tonnes as against 341,000 tonnes on 25th January 2012. Copper inventories in the warehouse monitored by the Shanghai fell by 3.9 percent and stood at 197,091 tonnes in the last week

Outlook

In today's session, we expect base metals to trade with upward bias on account of rise in the risk appetite after observing positive data from the key consuming nations thereby resulting into improved demand. Weakness in the DX is also expected to support prices on the upside. In the domestic market, sharp gains in the prices are likely to be capped on account of appreciation in the rupee.