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Commodities Industrial Metals

Industrial metals (copper, aluminium, nickel, etc.) daily review (January 27, 2014)

January 27, 2014, Monday, 05:27 GMT | 00:27 EST | 10:57 IST | 13:27 SGT
Contributed by Angel Broking


Base Metals
 
Base metals on the LME traded on a negative note except Nickel in the last week on the back of unfavorable manufacturing data from the US and China. Also, negative sales data from UK coupled with mixed global market sentiments acted as negative factor. Further, weakness in the DX along with positive economic data from Euro Zone could not cushion sharp negative movement. Also, decline in LME inventories over the week could not provide respite to prices.
 
In the Indian markets, base metals traded lower but Rupee depreciation restricted sharp downside in prices.
 
 
Copper
 
LME Copper slumped by around 2 percent last week taking cues from negative manufacturing data from two biggest consumers, the US and China. Also, weak economic data from the UK along with mixed global market sentiments exerted downside pressure on prices. Additionally, QE taper concerns ahead of the January 28th – 29th Federal Reserve meeting acted as a negative factor.
 
Further, weakness in the DX, decline in inventories, monetary easing of 255 billion by China coupled with positive manufacturing data from the Euro Zone could not restrict sharp downside in prices. The red metal touched a weekly low of $7176.25/tonne and closed at $7185/tonne on Friday.
 
MCX Copper prices traded lower by 0.7 percent despite Rupee depreciation touching a weekly low of Rs.451.9/kg and closed at Rs.455.5/kg on Friday.
 
 
Outlook
 
We expect the base metals to trade mixed today on the back of weak market sentiments coupled with strength in the DX will act as negative factor. Further, expectation of decline in US New Home Sales data in the evening session will exert downside pressure on the prices. Also, decline in manufacturing data from the US and China in the last week will continue to add downside pressure on the prices. On the other hand, forecast for favorable German Ifo Business Climate will support an upside in the prices. Additionally, positive manufacturing data from the Euro Zone in the prior week will act as positive factor. In the Indian markets, Rupee depreciation will cushion sharp downside or even reversal in the prices.

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