• Industrial metals (copper, aluminium, nickel, etc.) daily review (September 07, 2015)

    Base Metals

    Base metals on the LME apart from Aluminum traded lower last week as activity in China’s manufacturing sector contracted at its fastest pace in three years, instigating fears about a China slowdown that have roiled global markets.

    However, sharp losses were cushioned as short sellers covered their positions ahead of a 2 day Chinese Victory day holiday. Also, global markets rallied after statement by Mario Draghi that asset purchases “are intended to run until the end of September 2016, or beyond, if necessary,” indicated that the bank could extend its more than €1 trillion ($1.1 trillion) bond-purchase program beyond its targeted end date of September 2016.

    On the MCX, all the base metal prices except Copper and Aluminium traded lower in the last week.


    Last week, LME Copper prices declined by 0.3 percent as manufacturing activity in the U.S. expanded at the slowest rate in more than two years in August following Chinese manufacturing numbers which fell to three year low, there raising concerns over demand for the red metal.

    However, European Central Bank President Mario Draghi sent a strong signal that the bank is prepared to expand its already massive bond-buying program, thereby buoying global markets. Further, weakness in the DX along with supply cuts restricted sharp gains.

    MCX copper prices jumped by 1.5 percent and closed at Rs.347.5/kg owing to Rupee depreciation.


    We expect Copper prices to trade lower today as the US unemployment rate dropped to a near 7-1/2-year low in August, thereby retaining prospects of a Federal Reserve interest rate hike later this month. In addition, copper production from Peru jumped 30 percent in July from a year ago as output from the country's biggest mine, Antamina, nearly doubled put rest to worries of threats to copper mine supply. However, hedge funds and money managers cut net short position on copper to the smallest since mid-June along with US banks closed in observance of Labor Day will restrict sharp fall.

    On the MCX, copper prices are expected to trade lower today in line with international trends.

    Contributed by Angel Broking
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