India Base Metals: Most down on demand concerns; econ data eyed

Informist, Tuesday, Oct 17, 2023


By Ishan Rathi


MUMBAI – Futures contracts of most base metals on the Multi Commodity Exchange of India and the London Metal Exchange fell today because of concerns about demand amid weakening global economic activity, slowing growth in top consumer China, and selling by commodity trading advisers. 


A looming debt default by Country Garden, one of China's largest property developers, also weighed on base metal prices. The company is racing against time as a 30-day grace period for payment ends today, and failure to make the payment will put its entire offshore debt in default. The property sector is one of the biggest users of base metals.


However, the downside in base metals was cushioned by a fall in stocks and weakness in the dollar, which makes dollar-denominated commodities such as non-ferrous metals cheaper for holders of other currencies.


The dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.1% at 106.20, ahead of US core retail sales and industrial production data later today.


"Base metals are trading lower today as markets grow cautious ahead of key economic data releases from top consumer China," Kotak Securities said in a note. Data on China's GDP, retail sales, and industrial production is expected on Wednesday.


"War will be a geopolitical concern due to which risky assets tend to go down," said Ajay Kedia, managing director, Kedia Advisory. 


ALUMINIUM prices fell because of weak physical demand and rising production in China. However, the downside was restricted due to a fall of 2,000 tn in stocks at LME-registered warehouses.


COPPER prices slipped because of heavy selling by commodity trading advisers, and as LME inventories rose to a two-year high of 181,000 on Monday. Weakness in the dollar and a fall of 325 tn in stocks at LME-approved warehouses limited the fall in the red metal.  


LEAD contracts gained due to short-covering of positions by traders on the domestic exchange. However, a sharp rise of 9,400 tn in stocks at LME-accredited warehouses today limited the upside. 


ZINC contracts underperformed other base metals on the downside due to concerns about demand in China.


* At 1810 IST, on the MCX, the October futures contract of:

–Aluminium was at 201.55 rupees a kg, down 0.5%

–Copper was at 696.20 rupees a kg, down 0.6%

–Lead was at 185.70 rupees a kg, up 0.4%

–Zinc was at 217.45 rupees a kg, down 1.4%


* Outlook for the evening session on the MCX:

–Aluminium contract seen at 199.0-203.0 rupees

–Copper seen at 690.0-702.00 rupees

–Lead seen at 183.50-188.0 rupees

–Zinc seen at 215.20-221.0 rupees



US$1 = 83.26 rupees

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


Edited by Avishek Dutta


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