Base Metals Trade Higher on Positive ISM Data

Base metals gained in yesterday’s trading session as global manufacturing activity increased followed by better construction spending from US. The Equities have been on a gaining spree and the Euro gained 0.59 percent supporting the gain in metals.

Today morning the metals are trading slightly negative at the electronic trading platform of LME. Metals are trading with a loss of 0.2 to 0.9 percent as the inventories witness stockpiling at warehouses followed by shrinking profit of miners. However the equities continued to rally and the Asian markets are trading positive.

The global vehicle sales have also increased may continue to support gain in prices due to better automobile outlook. The Euro-zone continues to be a threat for gaining prices and Greece needs to complete its bond-swap deal latest by the week end. Greece may possible go for another bailout or may exit from the EU at most by 20th March.

Therefore the markets may keenly follow the developments and Euro may continue to be positive for the day. From the economic data front, we saw the Euro-zone manufacturing activity increased and it may increase raw-material consumption thereby reducing prices of the same. Hence PPI may witness fall and may continue to support metal prices.

The US non-farm productivity is also expected to increase after better manufacturing and construction data. The jobless claims may remain similar as new addition of jobs has been quite slow. Overall we expect base metals to be on the gaining side for the day ahead of better economic releases and higher equities.

Aluminium

Aluminum prices gained 1.21 percent at LME amidst better economic releases and buoyant equities, however the gains were limited to 0.09 percent at MCX.

Inventory has witnessed stockpiling and cancelled warrants have also declined slightly indicating weak spot demand.

However due to shift in manufacturing and better automobile and aerospace demand may continue the bullish trend.

Copper

Copper prices gained by 1.44 percent at LME due to better spot demand and increased global manufacturing.

Concerns of fresh strike are lingering at the Escondida mine of BHP Billiton the largest Copper mine owned at Chile where workers are meeting the administration and would be of much interest for the day. It may support the gaining spree due to continued supply constrains.

Lead

Lead prices followed base metal pack and gained 0.99 percent at LME though inventories continued to stockpile at warehouses.

As European and Chinese manufacturing increased followed by gaining global equities prices may continue to gain slightly for the day, however.

European concerns and slower growth of developing nations have been an immediate threat for the metal.

Nickel

Nickel prices came up by 0.58 percent at LME though inventories witnessed stockpiling due to better economic releases.

BHP Billiton may cut jobs and reduce mining temporarily at its Nickel West unit in Australia citing weak Nickel price.

Nickel prices are expected to trade range bound for the day and in near term the prices may remain similar as supply continues to outpace demand.

Zinc

Zinc prices gained 1.19 percent at LME though inventories continued to stockpile followed by weak spot demand.

The metal is a good indicator of economic activity and prices aligned with economic releases and better Euro-zone and US releases may continue to support the trend.

Zinc prices may continue to gain for the day as better automobile demand followed by low energy prices may support prices to gain.

Courtesy: Karvy Commtrade Ltd.