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Commodities Industrial Metals

Industrial metals (copper, aluminium, nickel, etc.) daily review (January 31, 2014)

January 31, 2014, Friday, 09:34 GMT | 04:34 EST | 14:04 IST | 16:34 SGT
Contributed by Angel Broking


Base Metals
 
Base metals on the LME traded lower yesterday on the back of negative economic data from the US. Further, QE taper of $10 billion announced by the Federal Reserve on Wednesday exerted downside pressure. Additionally, decline in manufacturing data from the China also acted as a negative factor.
 
Also, strength in the DX along with mixed global market sentiments continued with downside pressure on the prices. However, decline in inventories except Nickel cushioned sharp fall in the prices.
 
In the Indian markets, base metals traded on a negative note despite Rupee depreciation.
 
 
Copper
 
LME Copper fell by 0.4 percent yesterday taking cues from sharp decline in pending home sales data from the US, the second biggest consumer. Also, announcement of QE taper of another $10 billion by the Federal Reserve on Wednesday led to strength in the DX and exerted downside pressure. Further, drop in manufacturing data from China acted as a negative factor.
 
However, decline in inventories by 0.8 percent to 316,200 tonnes prevented sharp downside movement in the prices. The red metal touched an intra-day low of $7066/tonne and closed at $7097.5/tonne on Thursday.
 
MCX Copper prices plunged by more than 1 percent yesterday touching an intra-day low of Rs.446.35/kg and closed at Rs./kg on Thursday.
 
 
Outlook
 
We expect base metals prices to trade lower on the back of negative economic data from the US and China in yesterday’s trading session. Further, expectations of mixed economic data from Euro Zone and US in the evening session will exert downside pressure on prices. Additionally, weak market sentiments due to QE tapering by the Federal Reserve along with strength in the DX will act as a negative factor. In the Indian markets, Rupee appreciation will add downside pressure in the prices.