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Informist, Wednesday, Sep 4, 2024

By Ashutosh Pati

MUMBAI – Futures contracts of all base metals fell today on the Multi Commodity Exchange of India, tracking prices on the London Metal Exchange which fell because of weak US economic data and worries about lower demand from China. 

The US Institute for Supply Management's manufacturing Purchasing Managers' Index rose to 47.2 in August compared with 46.8 in the previous month. However, analysts at Dow Jones had forecast the index to rise to 47.9. The poor economic data from the world's top economy weighed on metal prices today. 

"Market sentiment about the possibility of a recession in the US is fluctuating, with negative views getting a bump from weak US manufacturing PMI data," Dow Jones quoted analysts at Nanhua Features, in a note.

Concerns about demand in China also weighed on sentiment. The Caixin services purchasing managers' index for China fell to 51.6 in August from 52.1 the previous month, highlighting ongoing economic weakness in the top consumer, Kotak Securities said in a note. 

Moreover, the market expects the US Federal Reserve to cut interest rates at its September meeting, which could provide some relief to base metal prices. Poor economic data from the US is likely to provide more impetus for the Fed to ease their monetary policy. The probability of a 25-basis-point interest rate cut by the US Federal Reserve this month is 59% and that of a 50-bps rate cut is 41%, according to the CME FedWatch tool.

The downside in base metal prices on LME today was cushioned by a weaker dollar, which makes dollar-denominated commodities cheaper for the holders of other currencies.

At 1550 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was down 0.1% at 101.67.

COPPER prices fell on the MCX, tracking prices on the LME, as Goldman Sachs reduced their copper price forecast to an average of $10,000 per tn in 2025 from their previous forecast of $15,000 per tn.

At 1620 IST, on the MCX, the September contract of :

- Copper was at 784 rupees per kg, down 0.2%

- Aluminium was at 220.05 rupees per kg, down 1.2%

- Zinc was at 261.20 rupees per kg, down 1.6%

- Lead was at 183.60 rupees per kg, down 0.6%

Trading levels for the day on the MCX :

- Copper contract seen at 772-789 rupees

- Aluminium contract seen at 217.45–223.25 rupees

- Zinc contract seen at 258-266.75 rupees

- Lead contract seen at 181-185 rupees

End

US$1 = 83.97 rupees

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

Edited by Tanima Banerjee

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