• Industrial metals (copper, aluminium, nickel, etc.) daily review (May 06, 2015)

    Base Metals

    Base metals on the LME traded higher yesterday as weak economic data from China continues to boost hopes of additional monetary stimulus from the biggest consumer. Also, weakness in the DX supported base metal prices.

    Metals received a boost from concerns regarding supply shortfall and hopes of renewal in the global economy.

    On the MCX, base metals traded on a positive note in line with international trends but Rupee appreciation restricted sharp gains.


    Copper

    LME Copper prices jumped by 1.3 percent as Glencore, the world's third-biggest copper-mining company, reported weaker production and posted a nine per cent drop in first-quarter copper output. Also, weakness in China’s manufacturing gauge signaled contraction at Chinese factories, fuelling anticipation that more stimulus measures will be announced.

    In addition, new forecasts from the European Commission showing euro zone economic growth will be stronger than previously expected this year buoyed further gains in the metal.

    MCX copper prices rose by 0.2 percent and closed at Rs.414.5/kg on Tuesday as Rupee appreciation capped sharp upside.


    Outlook

    We expect LME Copper prices to trade higher as China’s service sector which accounts for 48.2 percent compared with the 42.6 percent contribution from manufacturing and construction grew at its fastest pace this year in April. Also, easy monetary policy from the EU along with expectations of pick u in global demand will support prices.

    However, sharp gains will be capped as investors will be cautious ahead of ADP nonfarm payrolls data due to be released tonight.

    On the MCX, Copper prices are expected to trade higher taking cues from international markets.

    Contributed by Angel Broking
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