Base Metals Settle Higher in Unison With Positive Euro

Base Metal prices pared all their intraday losses and ended with gains of anywhere between half to two percent. Nickel was the only exception to end lower with losses of close to a percent.

European Central Bank unexpectedly cut interest rates by 25 bps and the Greece Prime Minister cancelled the plan of referendum.

Euro ended with gains of half a percent thereby supporting metal prices as well. Factory orders from US came in higher than expected while the ISM manufacturing numbers came in modestly lower.

US equity markets ended higher with gains of close to two percent as ECB’s interest rate cut along with Greece’s cancellation of referendum boosted optimism.

Taking cues most of the Asian equity markets are trading higher with gains of one to three percent. Euro is trading marginally change but the bias remains on the higher side. In the morning session on LME, base metal prices are trading higher with gains of half percent.

On the fundamental front, talks between workers and management at Peru's Cerro Verde mine would take place today. On the economic data front, German factory orders are expected to come in modestly higher.

From US, key employment report would be released and the expectation is that job additions across the sectors were witnessed with marginal slower pace in the broader non-farm payrolls sector. Unemployment rate might however remain unchanged at 9.1 percent.

Overall, base metal prices are expected to remain on the higher side. Indian rupee has appreciated by half a percent and thereby this would limit the gains in the Indian markets.

Aluminium

Aluminium prices ended higher with gains of nearly a percent on LME while gains in Indian markets were limited to 0.7 percent.

Aluminium stocks from London Metal Exchange witnessed draw-downs of 1,825 tonnes as against decline of 1,350 tonnes on the previous day.

After drifting lower towards $20/tonne mark, basis has been moving back higher towards the average levels of $30/tonne.

Copper

Copper prices increased by 0.4 percent on LME while in Indian markets gains were limited to 0.2 percent.

Copper stocks on London Metal Exchange witnessed draw-downs of 1,150 tonnes as against decline of 1,475 tonnes on the previous day.

After moderating for almost a week, cancelled warrant ratio has bounced back strongly and now stands back near the 14 percent mark indicating that draw-downs might continue in the near term.

Lead

Lead stocks from London Metal Exchange warehouses witnessed draw-downs of 1,300 tonnes as against decline of 825 tonnes on the previous day.

Preliminary automobile sales numbers from companies in India has been indicating that sales have moderated to lowest level in 2011 as higher interest rates hurt sales.

Open interest on MCX declined by 8 percent along with increase in prices by more than a percent indicating unwinding of positions.

Nickel

Nickel prices underperformed the entire base metal pack as it ended with losses of 0.8 percent on

LME while in Indian markets it ended down by 0.3 percent Nickel stocks on London Metal Exchange witnessed draw-downs of 552 tonnes as against decline of 138 tonnes on the previous day.

Even on a weekly basis, stocks are headed for net draw-downs of more than a 1000 tonnes as against build- up in the previous week.

Zinc

Zinc was the top gainer among the base metal pack as it ended with gains of more than two percent on LME and 1.5 percent on MCX.

Zinc stocks from London Metal Exchange witnessed draw-downs of 3,825 tonnes as against decline of 4,100 tonnes on the previous day.

Cancelled warrant ratio continues to remain stable at close to 10 percent of total stocks indicating that draw-downs might continue. Open interest declined by nearly 10 percent indicating unwinding of positions.