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Commodities Industrial Metals

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

July 21, 2014, Monday, 11:19 GMT | 06:19 EST | 14:49 IST | 17:19 SGT
Contributed by Angel Broking


Base Metals

Base metals on the LME traded lower last week as jitters over a possible bond default in China's construction sector triggered a round of profit taking after a Chinese builder warned its investors it may not be able to repay a $65 million debt possibly becoming the first borrower to default in the country's largest bond market and highlighting concerns over the construction sector. Also, unfavorable retail sales and housing data from the US along with weak economic data from Euro Zone acted as negative factors.

However, manufacturing data from the US turned out to be positive despite expectations of it slowing down along with favorable GDP data from China restricted sharp fall in prices. In addition, comments from the Fed policy makers that the bond buying programme will be winded up as soon as October 2014 is a progressive signal that economic optimism in the US economy is growing which in turn will create demand for the base metals.

In the Indian markets, all the base metals traded largely on a negative note taking cues from international trends.


Copper

LME Copper prices declined by 2.3 percent last week as the possible bond default in China’s construction sector raise alarms on the demand side for copper. Also, Anglo American, one of the largest mining companies, reported higher copper output for the first half of the year, thereby acting as a negative factor for prices. In addition, weak housing data from the US along with unfavorable data from Euro Zone exerted downside pressure on prices.

However, the FED policy makers are sure to wind up its bond buying programme by its October meeting owing to increasing optimism regarding the US economy along with rise in China’s GDP cushioned sharp fall. The red metal closed at $6993.5/tonne in the last session.

MCX Copper prices fell by 2.4 percent and touched a weekly low of Rs.424.75/kg before closing at Rs.426.2/kg on Friday.


Outlook

We except LME Copper prices to trade sideways as Chinese default concerns along with rising Copper output will exert downside pressure on prices. On the contrary, weakness in the DX coupled with rise in risk appetite in the market sentiments will act as a positive factor for prices. MCX Copper prices will trade sideways today taking cues from international markets.

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