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Informist, Wednesday, Aug 7, 2024

By Sandeep Sinha

MUMBAI – Futures prices of COPPER on the Multi Commodity Exchange of India fell today, tracking prices on the London Metal Exchange, because of worries about demand in top consumer China. Sentiment for the red metal was also weighed down by the rising inventory at LME-registered warehouses and the strength in the dollar.

The copper stock at LME-approved warehouses rose sharply today by 42,175 tn to 294,750 tn, the highest level since September 2019. The rise in Chinese copper output and weak property sector demand also weighed on prices.

"Copper prices have plummeted to a four-month low, influenced by a bleak demand outlook in China and the US, the world's largest economies," said Saish Sandeep Sawant Dessai, base metals analyst at Angel One Ltd. "This sell-off, centred around copper, a crucial metal in power and construction, has seen prices in London drop to their lowest since March." 

Dessai said the weak consumption forecast, compounded by fears of a recession in the US, had contributed to the decline, though the losses were mitigated by tight mine supply and potential demand growth from the energy transition sectors.

At 1825 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was up 0.3% at 103.18. A stronger greenback makes dollar-denominated commodities such as copper expensive for holders of other currencies, denting demand.

"Despite most risk assets consolidating after Monday’s rout, the base complex continues to be under pressure for now. Index Roll window starts today," Al Munro at broker Marex said in a note.

ALUMINIUM prices fell owing to rising supply amid weak demand. Traders increasing their short positions on the domestic exchange also hurt prices.

LEAD prices traded higher, taking cues from the LME, due to a fall in exchange stocks by 3,550 tn.

ZINC contracts traded lower as market participants increased their short positions on the MCX. However, the downside was restricted by a fall in LME-accredited warehouse stocks by 3,450 tn.

* At 1825 IST, on the MCX, the August contract of:

–Aluminium was at 211.35 rupees a kg, down 1.2%

–Copper was at 775.55 rupees a kg, down 0.9%

–Lead was at 183.35 rupees a kg, up 0.2%

–Zinc was at 245.70 rupees a kg, down 0.7%

* Outlook for the evening session on the MCX:

–Aluminium contract seen at 208.90-213.70 rupees

–Copper seen at 764.50-784.40 rupees

–Lead seen at 181.40-184.80 rupees

–Zinc seen at 242.00-248.10 rupees

End

US$1 = 83.96 rupees

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

Edited by Rajeev Pai

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