Base Metals Settle Higher on China’s Manufacturing Data

Base metal prices ended substantially higher as positive PMI manufacturing numbers from China along with optimism about Europe supported industrial metals to move higher.

Gains of anywhere between three to six percent were witnessed in the base metal pack. Open interest declined for most of the metals along with increase in prices indicating unwinding of positions. PMI manufacturing numbers from China came in at five month highs.

Economic data from Euro zone though came in lower, optimism that European leaders would reach some sought of measures on Wednesday boosted sentiment.

US equity markets ended higher as Dow Jones clocked in gains of 0.9 percent while the NASDAQ ended with gains of more than two percent. Optimism about Europe along with some positive corporate announcement provided boost to US equity markets.

Asian equity markets are also trading largely on the higher side with the exception of few like Japanese market where stronger Yen is creating concerns.

Dollar index is trading largely flat near 76 levels. In the morning session on LME, base metal prices are trading higher with gains of anywhere between half to one percent.

On the economic data front, house price index is expected to indicate slight growth. US consumer confidence might however have improved in the month of October with slight decline in Richmond Fed manufacturing numbers. Overall, base metal prices are expected to remain on the higher side.

Aluminium

Aluminium prices ended higher with gains of more than 4 percent on LME and 3 percent in Indian markets.

Aluminium stocks from London Metal Exchange witnessed draw-downs of 3,600 tonnes as against decline of 4,900 tonnes on the previous day.

Open interest declined by 26 percent on MCX along with increase in price by 3 percent indicating unwinding of short positions which pushed prices higher.

Copper

Copper was the top gainer among the base metal pack as it ended with gains of nearly 7 percent on LME and 6.4 percent on MCX.

Copper stocks from London Metal Exchange witnessed huge draw-downs of 3,525 tonnes as against decline of 3,050 tonnes on the previous day.

On the fundamental front, Norilsk Nickel reported decline in copper production by 5.3 percent to 279,505 tonnes in the first nine months of 2011.

Lead

Lead stocks on London Metal Exchange witnessed modest build-up of 325 tonnes as against increase of 25 tonnes on the previous day.

Cancelled warrant ratio has moved back further higher indicating that either the build-up might slow down or even draw-downs might be witnessed.

Open interest declined by nearly 20 percent along with increase in prices by more than four percent indicating unwinding of positions.

Nickel

Nickel stocks on London metal Exchange witnessed huge build-up of 906 tonnes as against draw-downs of 1,668 tonnes on the previous day.

Cancelled warrant ratio though has moved slightly higher it is still is lower from the average levels indicating that build-up might continue in the near term.

On the fundamental front, World’s largest nickel producer, Norilsk Nickel, indicated that total nickel output declined by 2.2 percent to 215,481 tonnes in the first nine months of 2011.

Zinc

Zinc prices ended higher with gains of nearly 4 percent on LME while in Indian markets gains were limited to 3 percent.

Zinc stocks from London Metal Exchange witnessed draw-downs of 2,075 tonnes as against decline of 2,550 tonnes on the previous day.

Open interest declined by nearly 19 percent indicating short covering which pushed prices higher by nearly 3 percent.