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Informist, Monday, Sep 9, 2024

By Ashutosh Pati

MUMBAI – Futures contracts of most base metals rose on the Multi Commodity Exchange of India and the London Metal Exchange because of short-covering, analysts said. A fall in stocks at the Shanghai Futures Exchange-monitored warehouses further supported prices, they said.

The data showed inventories at the Shanghai Futures Exchange-monitored warehouses fell for most base metals, except lead, in the week ended Friday. Copper stocks recorded their biggest weekly decline since March 2023, Dow Jones quoted ING analysts as saying in a note.

"Markets will stay volatile this week in anticipation of the US inflation data and European Central Bank's monetary policy," Manoj Kumar Jain, director at brokerage firm Prithvi Finmart, said. The US inflation data is due on Wednesday and the European Central Bank's monetary policy is due on Thursday. 

Market participants expect the European Central Bank to cut the deposit rate by 25 basis points to 3.50%, marking the second rate cut this year, Euronews reported. Markets also expect an additional cut in December, potentially totalling three 25 bps reductions in 2024, according to the report. 

The European Central Bank was the first major central bank to cut key interest rates by 25 bps in June. A rate cut would increase the borrowing power of the consumers, aiding demand for base metals.

Global markets also await the US inflation data, which will influence expectations about the Federal Reserve's interest rate cut decision this month. Markets expect at least a 25 bps rate cut by the US Fed in the September meeting. 

However, the gains in base metal prices were capped by a stronger dollar, which makes dollar-denominated commodities expensive for holders of other currencies. At 1802 IST, the dollar index, which measures the strength of the greenback against a basket of major currencies, was at 101.62, up 0.5%.

COPPER prices rose due to short-covering of positions by market participants on MCX. Copper inventories in Shanghai Futures Exchange-monitored warehouses fell to 215,374 tn in the week ended Friday, down 26,371 tn from the previous week.

ALUMINIUM prices rose on the MCX as aluminium stocks in warehouses fell by 3,973 tn to 285,947 tn in the week ended Friday.

At 1802 IST, on the MCX, the September contract of :

- Aluminium was at 217.8 rupees per kg, up 0.1%

- Copper was at 790.3 rupees per kg, up 1.1%

- LEAD was at 180.85 rupees per kg, down 0.1%

- ZINC was at 256 rupees per kg, up 0.9%

Trading levels for the day : 

- Aluminium contract seen at 216-221 rupees

- Copper contract seen at 778-797 rupees

- Lead contract seen at 179.55-183 rupees

- Zinc contract seen at 251.60-260 rupees

End

US$1 = 83.96 rupees

Edited by Saji George Titus

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