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Commodities Industrial Metals

Industrial metals (copper, aluminium, nickel, etc.) daily review (May 05, 2014)

May 5, 2014, Monday, 12:36 GMT | 07:36 EST | 16:06 IST | 18:36 SGT
Contributed by Angel Broking


Base metals on the LME traded on a negative note last week taking cues from rise in risk aversion in the markets as the US and the European Union imposed new sanctions on Russia. Also, fall in consumer confidence data in the US along with mixed economic data from Euro Zone exerted downside pressure on prices. Further, along with mixed trend in inventories acted as a negative factor.

However, sharp losses were cushioned on the back of positive pending home sales and Manufacturing PMI data from the US coupled with favorable economic data from UK. Further, weakness in the DX acted as a positive factor.

In the Indian markets, base metals declined sharply in the prior week owing to Rupee appreciation.


Copper

LME Copper prices fell by 0.6 percent last week on the back of weak market sentiments in the earlier part of week after the faceoff between Russia and the West worsened and the latter imposed additional sanctions on the former nation. Also, weak consumer confidence and manufacturing data from the US and mixed economic data from Euro Zone exerted downside pressure on prices.

However, favorable employment, manufacturing and pending home sales data from the US confirmed the Fed’s view that the economy is in a recovery mode, thereby leading to positive demand outlook for the red metal. Also, weakness in the DX along with decline in inventories by around 4 percent to 229,800 tonnes supported gains. The red metal touched a weekly low of $6591/tonne and closed at $6729/tonne on Friday.

MCX Copper prices plunged by 1.6 percent on account of Rupee appreciation and closed at Rs.411.55/kg after touching a weekly low of Rs.402.35/kg in the last trading session.


Outlook

We expect LME Copper prices to trade lower today on the back of weak manufacturing data from the biggest consumer, China. Also, weak market sentiments will exert downside pressure on prices. However, weakness in the DX will cushion sharp downside in prices.

In the Indian markets, Rupee movement will provide further direction to prices.