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Commodities Industrial Metals

Industrial metals (copper, aluminium, nickel, etc.) daily review (January 21, 2014)

January 21, 2014, Tuesday, 06:26 GMT | 01:26 EST | 11:56 IST | 14:26 SGT
Contributed by Angel Broking

Base Metals
Base metals on the LME traded on a mixed note yesterday on the back of unfavorable economic data from China. However, decline in inventories of all base metals except Nickel coupled with upbeat global market sentiments cushioned sharp downside. Also, drop in China’s money market rates to the lowest level in four weeks, boosted demand for the metals.
In the Indian markets, base metals traded on a negative note despite Rupee depreciation.
LME Copper traded lower by 0.1 percent yesterday taking cues from unfavorable economic data from the World’s biggest consumer. However, the People Bank of China expanded money supply to meet demand ahead of the Lunar year holiday prevented sharp downside movement. Also, upbeat global market sentiments acted as a positive factor. The red metal touched an intra-day low of $7300.25/tonne and closed at $7314.5/tonne on Monday.
MCX Copper prices fell by 0.5 percent yesterday touching an intra-day low of Rs.456/kg and closed at Rs.456.45/kg on Monday.
We expect base metals to trade higher on account of easing liquidity in China ahead of Lunar year holiday. Also, expectations of positive economic data from the Euro Zone along with upbeat global market sentiments will support gains. However, concerns of further QE taper to be announced in the Federal Reserve meeting on 28th-19th January coupled with growth worries in China will cap sharp gains or even reversal in the prices. Also, estimates of unfavorable industrial data from the UK coupled with strength in the DX will act as negative factors.
In the Indian markets, Rupee appreciation will cap sharp gains in the metals.