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Informist, Monday, Aug 5, 2024

By Sandeep Sinha

MUMBAI – Prices of COPPER on the Multi Commodity Exchange of India fell today, tracking the London Metal Exchange, because weak economic data from the US and China raised the prospect of a global recession. Sentiment for the red metal was also weighed down by the rising inventory at LME-registered warehouses.

The copper stock at LME-approved warehouses rose by 4,850 tn to 251,350 tn, the highest since September 2021. The continued weakness in China's property sector and slowdown in industrial activity also weighed on copper demand.

Copper is on the verge of slipping into bear market territory, having declined 19.8% from the recent high of $10,925 per tn on May 20. A bear market is a condition during which prices of an asset decline over 20% or more from recent highs. The period generally suggests negative sentiment for an asset class and indicates prolonged weakness. The red metal is one of the leading barometers of global economic health as it is used in many sectors.

The other base metals also faced selling pressure due to increased risk aversion amid broad-based selloffs across asset classes. "We are currently seeing growth-dependent commodities from energy to industrial metals suffer a setback amid the outlook for weaker economic growth, not only in China but increasingly also in the US where the risk of a recession is currently on the rise," Ole Hansen, head of commodity strategy at Saxo Bank, said in a research note.

"Base metals affected by global equity and currency market volatility. Over the last few weeks, metal prices are dragged lower by worries over flagging Chinese demand," Kotak Securities said in a note. However, uncertainty over the US economy and the Federal Reserve’s need to engineer a soft landing have added to headwinds, the brokerage added.

ALUMINIUM prices fell as traders trimmed their long positions on the domestic exchange.

LEAD contracts traded lower as traders increased their short positions on the domestic bourse.

ZINC contracts erased earlier gains and turned negative as market participants raised their short positions on the MCX.

* At 1900 IST, on the MCX, the August contract of:

–Aluminium was at 210.00 rupees a kg, down 0.3%

–Copper was at 776.00 rupees a kg, down 2.4%

–Lead was at 181.90 rupees a kg, down 2.1%

–Zinc was at 246.00 rupees a kg, down 2.1%

* Outlook for the evening session on the MCX:

–Aluminium contract seen at 207.60-212.40 rupees

–Copper seen at 763.30-792.80 rupees

–Lead seen at 180.00-186.00 rupees

–Zinc seen at 240.90-254.10 rupees

End

US$1 = 83.85 rupees

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

Edited by Aditya Sakorkar

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