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Informist, Thursday, Sep 12, 2024

By Ashutosh Pati

MUMBAI – Futures prices of all base metals rose on the Multi Commodity Exchange of India today, tracking gains on the London Metal Exchange, buoyed by hopes of an interest rate cut by the US Federal Reserve next week, analysts said. The sentiment was aided by a fall in stocks at LME-registered warehouses.

US inflation rose 0.2% on month in August, in line with the rise in July, and 2.5% on an annual basis. Core inflation, excluding the food and energy components, whose prices can sometimes be volatile, rose 0.3% on a monthly basis, higher than the 0.2% expected by a Reuters poll.

The US Federal Reserve is expected to start cutting rates next week with a quarter-of-a-percentage-point reduction, which could boost economic growth and the demand for base metals, analysts said. According to the CME FedWatch tool, markets are now pricing in an 85% chance of the Fed cutting interest rates by 25 basis points at its meeting next week. A rate cut by the Fed would aid the demand for base metals.

Traders are now awaiting the European Central Bank's monetary policy outcome due today and major economic data from top base metals consumer China later this week.

Investors continue to assess the demand outlook in China, analysts said. "The Securities Times highlighted in a front-page commentary the need for China to introduce new counter-cyclical measures to boost domestic consumption and support economic growth, given the growing uncertainty in external demand," Kotak Securities said in a note.

COPPER prices rose on the MCX, tracking gains on the LME, as copper inventories in LME-registered warehouses fell by 1,225 tn to 314,950 tn. Moreover, copper production in Peru, the world's third-largest producer of the red metal, is likely to fall short of a government goal of 3 mln tn this year, according to mining.com.

ALUMINIUM prices rose on the MCX, tracking gains on the LME, as stocks in LME-registered warehouses fell by 3,500 tn to 827,850 tn.

LEAD prices rose on the MCX, tracking gains on the LME. "Lead prices may receive further support following reports that Chinese smelters have reduced output to improve margins," Kotak Securities said in a note.

ZINC prices rose on the MCX, tracking gains on the LME, as stocks in LME-registered warehouses fell by 1,725 tn to 232,725 tn.

At 1620 IST, on the MCX, the September futures contracts of:

- Aluminium was at 225.3 rupees per kg, up 1%

- Copper was at 801.1 rupees per kg, up 1.1%

- Lead was at 184.8 rupees per kg, up 0.9%

- Zinc was at 262.7 rupees per kg, up 1.3%

Trading levels for the day on the MCX:

- Aluminium contract seen at 223-228 rupees 

- Copper contract seen at 792-808 rupees

- Lead contract seen at 181.50-187.00 rupees

- Zinc contract seen at 256.20-266.00 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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