Base metals under pressure on weak Euro

After trading on the higher side initially, base metal prices pared all their gains to end with losses of anywhere between half to two percent.

Comments by the German minister that there would not be any definite solution reached in the October 23 meeting weighed on the euro and thereby on the metal prices as well.

US industrial production numbers came largely in line with expectation while the empire manufacturing numbers pointed a dismal picture about the activity.

US equity markets tumbled and ended lower with losses of more than two percent as concerns about the euro reemerged. Taking cues most of the Asian equity markets are trading lower with cuts of anywhere between one to three percent.

Chinese GDP numbers came in lower than expected at 9.1 percent for the third quarter while the retail sales witnessed some improvement. Euro is trading with marginal change after loss of more than a percent on the previous day.

In the morning session on LME, base metal prices are trading lower with losses of half to one percent. On the economic data front, ZEW survey numbers from Euro zone might come in lower.

TIC flows from US along with NAHB housing market index would be watched. Indian rupee is trading down by 0.4 percent and thereby would limit the losses of metal prices in Indian markets.

Overall, given the weakness in the equity markets and concerns that no definitive measures would be taken by the Euro zone countries, base metal prices might remain under pressure.

Aluminium

After witnessing draw-downs for three consecutive days, aluminum stocks on London Metal Exchange witnessed build-up of 8,825 tonnes.

On the fundamental front, Rio Tinto, one of the global major in mining, is planning to sell 13 aluminium assets across various locations. The main aim is to boost performance.

After witnessing unwinding on the previous day, open interest increased by 14 percent on MCX, indicating build-up of short positions.

Copper

Copper prices declined by nearly 0.6 percent on LME and 1 percent on MCX.

Copper stocks which witnessed nine consecutive draw-down of stocks, it saw stocks increase by 1,450 tonnes on London Metal Exchange.

On the fundamental front, Freeport McMoRan Copper Inc. halted its copper output on Monday owing to concerns about the security fears and workers blockades. The company even indicated that it is now operating at 50 percent of capacity.

Lead

Lead underperformed the entire base metal pack as it ended with cuts of more than two percent on LME and 2.5 percent on MCX.

Lead stocks on London Metal Exchange remain unchanged as against modest build-up of 175 tonnes on the previous day.

Open interest increased by a huge 32 percent along with cuts in prices by more than 2.5 percent indicating huge build-up of short positions.

Nickel

Nickel was the only metal to end in green. On LME it ended with gains of half a percent while it ended largely flat on MCX.

After witnessing build-up of 456 tonnes on the previous day, nickel stocks on London Metal.

Exchange witnessed draw-downs of 552 tonnes Cancelled warrant ratio is stabilizing at close to 8 percent of total stocks indicating that in the near term draw-downs might continue.

Zinc

Zinc stocks on London Metal Exchange witnessed draw-downs of 1,700 tonnes as against decline of 450 tonnes on the previous day.

On the fundamental front, South Korea bought 1,500 tonnes of zinc ingot. The country’s public procurement paid a premium of $135/tonne over the London Metal Exchange prices.

Zinc prices declined by nearly 1.3 percent along with increase in open interest of nearly 32 percent indicating huge build-up of short positions.