Commodities

Industrial metals (copper, aluminium, nickel, etc.) daily review (October 29, 2012)

Contributed by Angel Broking

Entire base metals pack traded on a weak note due to uncertainty of Spain bailout and slow down in the Euro zone economy. Additionally, strength in the DX also exerted downside pressure on the base met als pack. However, a bounce back was witnessed on Friday on the back of favourable data from the US economy.

Decline in LME inventories also cushioned sharp fall base metal prices in the last week.

Copper

Copper, the leader of the base metals complex fell 2.12 percent on the back of rise in the risk aversion amongst market participants amidst worries over possible sharp tightening in the Federal budget as Fiscal cliff is nearing to an end. This is being reflected in the slowdown in the US business investment. This created bearish market sentiments. Strength in the DX also acted as bearish factor for the copper prices.

Decline in LME Copper inventories by 1.2 percent however, cushioned sharp fall in the Copper prices week on week. LME Copper stocks stood at 2,19,800 tonnes. The red metal touched a weekly low $7,756.25/tonne and closed at $7,822/tonne on Friday.

On the domestic front, prices declined 2.4 percent and closed at Rs.426.00/kg after touching a weekly low of Rs.421.30 /kg due to appreciation in the Indian rupee.

Outlook

From the intraday perspective base metal prices are expected to trade on a positive note due to mixed global market sentiments. Positive data from US economy may increase the demand for the red metal. However, marginal gains in the DX are expected to cap sharp gains in the base metals pack. Depreciation in the Rupee will act as a supportive factor for the base metal prices on MCX.