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Informist, Thursday, Sep 26, 2024

By Ashutosh Pati

MUMBAI – Futures contracts of all base metals rose on the Multi Commodity Exchange of India and the London Metal Exchange as China pledged additional stimulus measures today, analysts said. These measures could boost the economy and aid demand for base metals.

Chinese leaders pledged to deploy "necessary fiscal spending" to meet this year's economic growth target of around 5%, Reuters reported. The remarks were made in an official readout of a monthly meeting of top Communist Party officials, the Politburo. These included guidance to the government to support household consumption and stabilise the troubled real estate market, the report said.

The combination of a potential stabilisation in China's housing sector and the prospect of a soft economic landing could lead to a sustained pickup in prices across the industrial metals complex, Daniel Hynes, an ANZ Research analyst, said in a note.

Following the US Federal Reserve's major interest rate cut of 50 basis points, the People's Bank of China gained flexibility to reduce its own rates and boost economic growth in response to deflationary pressures, Motilal Oswal said in a report.

The Chinese central bank will lower interest rates on existing mortgages by 50 bps and the minimum down payment requirement will be lowered to 15% for all home types, according to various media reports.

Rate cuts by global central banks lower the borrowing costs of consumers, which spurs demand for commodities such as base metals. Investors will take further cues from the US final GDP data and the initial unemployment claims data, due later today.

COPPER prices rose on the MCX, tracking gains on the LME amid tightening supply and higher demand ahead of China's national holiday in October, Dow Jones quoted Citic Futures analysts as saying in a note.

"The current upside (in copper prices) will prove to be sustainable, backed by the (Chinese) central banks' efforts to stimulate the economy along with a continuous downward trend in inventories," Motilal Oswal added.
  

ALUMINIUM prices rose as inventories in LME-registered warehouses fell by 2,500 tn, Kedia Advisory said in a note. 

LEAD prices rose as downstream lead-acid battery manufacturers restocked ahead of China's national holiday in October, Kedia Advisory said in a note. Further price fluctuations might be there as supply conditions are expected to ease after maintenance at lead smelters concludes in October.

At 1635 IST, on the MCX, the October futures contracts of:

- Aluminium was at 236.60 rupees per kg, up 1.2%

- Copper was at 853.50 rupees per kg, up 1.5% 

- Lead was at 186.10 rupees per kg, up 0.9%

- ZINC was at 279.50 rupees per kg, up 2%

Trading levels for the day on the MCX:

- Aluminium contract seen at 231.30-238.65 rupees 

- Copper contract seen at 836.00-854.00 rupees

- Lead contract seen at 182.00-187.00 rupees

- Zinc contract seen at 271.75-280.40 rupees

End

US$1 = 83.64 rupees

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

Edited by Tanima Banerjee

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