India Base Metals
Up on MCX as rupee slumps to record low; down on LME
This story was originally published at 19:29 IST on 3 February 2025
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By Ashutosh Pati
MUMBAI – Futures contracts of all base metals rose on the Multi Commodity Exchange of India despite negative cues from the London Metal Exchange. Additionally, the rupee hitting a fresh all-time low against the dollar is likely to have pushed metal prices higher. The positive sentiment was further lifted by better-than-expected manufacturing data from the eurozone.
The rupee ended at a fresh record low of 87.19 to the dollar, down 0.7%, on selling by foreign institutional investors and hopes of an interest rate cut by the Reserve Bank of India at its bi-monthly monetary policy review.
The Hamburg Commercial Bank Eurozone Manufacturing Purchasing Managers' Index was revised higher to 46.6 for January, exceeding the preliminary estimate of 46.1 and up from 45.1 in December. While the indicator remained in contraction territory, it represented the weakest decrease in manufacturing activity since May 2024.
On the LME, non-ferrous metals pared losses but continued to trade in the red as the dollar index turned negative because of profit-taking. At 1912 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was down 0.2% at 109.18.
Prices of all base metals were trading lower on the LME as US President Donald Trump announced tariffs on imports from Canada, Mexico, and China, sparking fears of a global trade war and slower economic growth.
Trump announced 25% tariff on imports from Canada and Mexico and an additional 10% on goods from China, starting Tuesday. Canada and Mexico have threatened to retaliate with countermeasures. The Chinese government, meanwhile, said it would petition the World Trade Organization.
"Tariffs are a major headwind for metals," analysts at ING Economics said in a report. "Inflationary in nature, tariffs could limit interest rate cuts from the US Federal Reserve. At the same time, higher rates along with higher tariffs and greater geopolitical uncertainty will push up the dollar, providing headwinds to industrial metals demand."
Trading activity was subdued as Chinese markets remain closed for the Lunar New Year holidays and will only reopen Wednesday. Market participants await the US final manufacturing Purchasing Managers' Index and Institute for Supply Management's Manufacturing Purchasing Managers' Index data due later in the day for further cues.
At 1916 IST, on the MCX, the February futures contract of:
–ALUMINIUM was at INR 250.65 a kg, up 0.2%
–COPPER was at INR 828.7 a kg, up 0.1%
–LEAD was at INR 179.20 a kg, up 0.4%
–ZINC was at INR 263.7 a kg, up 0.5%
Trading levels for the day on the MCX:
-Aluminium contract seen at INR 245.80-INR 254.50
-Copper contract seen at INR 817.00-INR 836.60
-Lead contract seen at INR 175.80-INR 182.00
-Zinc contract seen at INR 256.60-INR 269.90
End
US$1 = INR 87.19
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Nishant Maher
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