India Base Metals
All down on weak Chinese economic data, weaker yuan
This story was originally published at 17:58 IST on 27 January 2025
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By Ashutosh Pati
MUMBAI – Futures contracts of all base metals fell on the Multi Commodity Exchange of India and the London Metal Exchange on disappointing economic data from China. Market sentiment was further hurt by weakness in the Chinese yuan against the dollar.
China's official manufacturing purchasing managers' index was at 49.1 for January, marking the first contraction since September. The latest data was lower than the 50.1 expected by economists polled by Reuters and 50.1 for December. A reading above 50 indicates an expansion, while one below 50 shows a contraction.
"China's surprisingly weak January PMIs cast doubt if the economy can gain a firmer footing after better-than-expected 4Q (Oct-Dec) GDP growth," Dow Jones quoted Tommy Wu, senior economist at Commerzbank Research as saying in a note. Although the latest PMI readings need to be taken with "a pinch of salt," due to the moving holiday effects of the Lunar New Year, the magnitude of decline was unexpectedly strong, Wu said.
The yuan fell 0.1% to 7.250 against the dollar, making dollar-denominated base metals expensive for Chinese buyers. The country is the biggest producer and consumer of base metals.
However, any further fall in base metals prices was limited by a weaker dollar and a fall in inventories at warehouses registered with the LME. At 1702 IST, the Dollar Index, which measures the strength of the greenback against a basket of six major currencies, was down 0.5% at 107.10. A weaker greenback makes dollar-denominated commodities such as base metals cheaper for buyers holding other currencies.
ALUMINIUM inventories at LME-accredited warehouses fell by 2,550 tonnes to 592,625 tonnes and COPPER stocks fell by 1,800 tonnes to 255,825 tonnes. ZINC stocks fell by 1,775 tonnes to 186,650 tonnes and LEAD inventories declined by 725 tonnes to 224,750 tonnes.
Market participants await the new-home sales data from the US later in the day for further cues.
At 1707 IST, on the MCX, the January futures contract of:
–Aluminium was at INR 252.55 a kg, down 0.1%
–Copper was at INR 837.20 a kg, down 0.5%
–Lead was at INR 177.60 a kg, down 0.1%
–Zinc was at INR 268.00 a kg, down 0.4%
Trading levels for the day on the MCX:
-Aluminium contract seen at INR 250.90-INR 256.00
-Copper contract seen at INR 827.20-INR 857.10
-Lead contract seen at INR 177.20-INR 178.50
-Zinc contract seen at INR 264.70-INR 276.00
End
US$1 = INR 86.34
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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