Commodities

Industrial metals (copper, aluminium, nickel, etc.) daily review (February 22, 2013)

Contributed by Angel Broking

Base metals pack continued to trade with a bearish tone on the back of worr i es that the demand for the metals might reduce in the coming months on expectation that Chinese government is likely to announce measures to curb rise in the property prices. There were reports that the government might extend a pilot property tax program to some more cities in an effort to cool the bubbling real estate markets. Strength in the DX coupled with unfavourable Philly Fed manufacturing index from the US also acted as a bearish factor for the base metal prices. Increase in the LME inventories also exerted downside pressure on the base metals.

MCX metal prices traced weakness in the international prices. However, de preciation in the rupee cushioned fall in the prices.

Copper

Copper prices extended losses of the previous day and fell 1.4 percent on T hursday. Weak economic data from the US along with worries of decline in the demand from China, the key consumer of the metal due to measures by the government to curb the rise in the property prices weighed on the copper prices. Apart from this, strength in the DX along with rise in the LME copper inventories also acted a s a bearish factor for the red metal in yesterday's session.

LME copper inventories gained 1.8 percent and stood at 420250 tonnes as against 412950 tonnes on February 20th, 2013.

Copper prices on LME touched an intra-day low of $7,813.5 per tonne and closed at $ 7,852 per tonne on Thursday. In the domestic markets, MCX copper fell 0.7 percent and closed at Rs. 429.1 per kg on Thursday tracking the international metal prices. Depreciation in the rupee however, cushioned fall in the prices.

Outlook

In the intra-day, we expect base metals prices to recover slightly after sharp fall amidst weakness in the DX. However, unfavourable data from the US and Europe might raise worries for the demand in the industrial metals which might restrict gains. Slow demand from the China might also restrict gains. In the domestic market, depreciation in the rupee will support an upside in the base metals pack on MCX.