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Informist, Monday, Oct. 21, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of most base metals rose on the Multi Commodity Exchange of India and the London Metal Exchange after China’s central bank cut interest rates. The positive sentiment was boosted by a decline in stocks at LME-registered warehouses.

The People's Bank of China cut its benchmark lending rates early Monday to revive the economy. It slashed the one-year loan prime rate by 25 basis points to 3.10% from 3.35%. It also reduced the five-year loan prime rate by 25 bps to 3.60% from 3.85%, which is likely to influence the pricing of home mortgages.

Stocks of aluminium in LME warehouses declined by 2,500 tn to 757,850 tn and copper fell by 2,000 tn to 284,200 tn. Lead stocks declined by 1,100 tn to 193,375 tn and zinc stocks by 1,850 tn to 237,175 tn.

"Base metals continue to trade positive as Chinese banks cut their benchmark lending rates, part of a push by Beijing to ensure Asia’s biggest economy meets growth targets for this year," Kotak Securities said in a note. "This move is part of Beijing's broader strategy to stimulate economic growth and meet its targeted 5% growth rate for the year."

However, further upside in non-ferrous metals was restricted by the strength in the dollar, which makes commodities priced in the greenback expensive for holders of other currencies. At 1722 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was up 0.2% at 103.64.

ALUMINIUM prices rose as traders rolled over their long positions on the domestic bourse. The prices were aided by increasing prices of alumina. 

COPPER prices rose because market players pared their bearish positions on the domestic exchange. The sentiment was supported by the expectation of increased demand after China’s central bank cut its interest rate.

LEAD prices fell marginally due to higher production in China. However, the downside was cushioned by a fall in stocks with LME-registered warehouses.

ZINC contracts traded higher, tracking gains in steel prices, as the metal is used for galvanisation.

At 1733 IST, on the MCX, the October futures contract of:

–Aluminium was at INR 238.50 a kg, up 0.2%

–Copper was at INR 827.65 a kg, up 0.7%

–Lead was at INR 182.30 a kg, down 0.1%

–Zinc was at INR 287.30 a kg, up 0.8%

Outlook for the evening session on the MCX:

–Aluminium contract seen at INR 237.60-241.90

–Copper seen at INR 821.40-833.60

–Lead seen at INR 182.00-183.40

–Zinc seen at INR 285.40-289.60

End

US$1 = INR 84.07

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

Edited by Rajeev Pai

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