India Base Metals: All down on prospect of US rate hike, firm dollar

Informist, Thursday, Jul 14, 2022


By Sandeep Sinha


MUMBAI – Futures contracts of all base metals fell on the Multi Commodity Exchange of India and London Metal Exchange due to the prospect of an aggressive rate hike by the US Federal Reserve to control inflation. The sentiment was further hurt by firm dollar and risk aversion on concerns of a global economic slowdown. 


* “Commodities have resumed their downward momentum and may not see a significant change in trend unless the US dollar corrects sharply or risk sentiment improves significantly,” Kotak Securities said in a report.


* US consumer price index rose to 9.1% in June from 8.6% in May, the highest since November 1981. 


* The surging COVID-19 cases in top consumer China and fresh restrictions imposed after the discovery of new variant raised concerns about demand slowdown.


* The dollar index, which measures the strength in the greenback against a basket of major currencies, touched a high of 108.64 during the day, its highest level in nearly two decades. A stronger greenback makes dollar-denominated commodities such as non-ferrous metals expensive for holders of other currencies.


* Investors await the release of US producer price index data and initial jobless claims later today for further cues.


* However, the persistent fall in LME-registered warehouse stocks and rupee touching a fresh lifetime low of 79.91 today against the US dollar cushioned the fall in metal prices. A weaker domestic currency makes dollar-denominated commodities expensive for domestic buyers.


ALUMINIUM price pared earlier gains and turned negative due to unwounding positions by traders on the MCX.


COPPER contract declined on concerns of demand slowdown and firm dollar. Traders increasing their short positions on the domestic bourse further hurt the price. 


* At 1640 IST, on the MCX, the July futures contract of:

 –Aluminium was at 205.75 rupees, down 0.2% 

 –Copper was at 624.25 rupees a kg, down 1.2% 

 —LEAD was at 173.40 rupees a kg, down 1%

 —ZINC was at 267.25 rupees a kg, down 1.1%


* Outlook for the evening session on MCX:

 –Aluminium contract seen at 204.40-207.80 rupees a kg

 –Copper seen at 619.80-637.0 rupees a kg

 –Lead seen at 171.80-176.10 rupees a kg

 –Zinc seen at 263.80–271.80 rupees a kg




US$1 = 79.87 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT


Edited by Sushmita Mukherjee



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