Commodities

Industrial metals (copper, aluminium, nickel, etc.) daily review (January 31, 2013)

Contributed by Angel Broking

Base Metals

Base metal prices traded on a positive note in yesterday's session. The gain was on optimism that the US Fed would continue the purchases of $ 85 billion of securities a month. Better data from the US on the consumer spending and a recovery in Europe also supported an upside in the copper prices. Some correction was witnessed after US GDP contracted more than expected and erased some of the gains. Weakness in the DX along with decline in inventories a lso supported an upside in the prices.

Copper

Copper prices gained 1.6 percent in yesterday's session. The gains in copper were seen on account of better data from the US and Europe. Weakness in the DX also supported an upside in the prices of base metals. Decline in the LME copper inventories also lent support to the metal prices.

LME Copper inventories declined 0.09 percent and stood at 371,425 in yesterday's session as compared to 371,750 tonnes on 29th January 2013. Copper prices on LME touched an intraday high of $8,245.5 per tonne and closed at $8,239 per tonne on Wednesday. In the domestic markets MCX copper rose 0.9 percent and closed at Rs. 442.1 per kg on Wednesday. Appreciation in the Indian rupee restricted gains in the copper prices on MCX.

Outlook

In the intra-day session, we expect metal prices to trade on a negative note on the unexpected contraction of the US economy, the largest consumer of the metals after China and low volumes on the account of Chinese Lunar Year. However, downside might be cushioned on account of the US Federal Reserve continuing its $85 billion bond buying programme per month in order to support the employment in the country. Japanese factory output also rose in the month of December raising demand for the metal. Appreciation in the Indian rupee might exert downside pressure on the MCX base metals prices.