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Informist, Tuesday, Mar. 4, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of all base metals traded in the red on the Multi Commodity Exchange of India and the London Metal Exchange Tuesday because of heightened fears of a global trade war, analysts said. Market sentiment was also hurt by a rise in inventories at warehouses registered with the Shanghai Futures Exchange.

The 25% tariffs imposed by the US on imports from Canada and Mexico, and the additional 10% levy on imports from China took effect Tuesday. In retaliation, China has announced fresh duties on several US agricultural and food products, which will take effect from Mar. 10. A trade war between the world's two largest economies could hurt demand for non-ferrous metals.

A rise in inventories of most metals at Shanghai Futures Exchange-monitored warehouses also weighed on prices. ALUMINIUM inventories rose 1,628 tonnes on week to 234,531 tonnes and COPPER inventories increased 8,246 tonnes to 268,337 tonnes in the week ended Friday. LEAD stocks rose by 10,637 tonnes to 59,176 tonnes, but ZINC inventories fell 5,874 tonnes to 79,391 tonnes.

Further losses in base metals prices were restricted by a weak dollar and positive economic data from China. At 1650 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was down 0.3% at 106.24. A weaker dollar makes commodities such as base metals, which are priced in the greenback, cheaper for buyers holding other currencies, aiding demand.

China's official Manufacturing Purchasing Managers' Index rose to 50.2 in February from 49.1 a month before, beating the market forecast of 49.9. In addition, the Caixin China Manufacturing Purchasing Managers' Index rose to a three-month high of 50.8 in February from 50.1 in January. China is the top producer and consumer of non-ferrous metals, and positive economic data from the country can boost demand for the metals.

"China's manufacturing activity expanded at the fastest pace in three months in February and the reading should reassure officials that last year's stimulus measures are helping shore up a patchy recovery in the world's second-largest economy," analysts at SMC Global Securities said in a report.

Market participants will now keep an eye on Beijing's upcoming National People's Congress meeting Wednesday for potential stimulus measures.

At 1655 IST, on the MCX, the March futures contract of:

–Aluminium was at INR 258.05 a kg, down 0.2%

–Copper was at INR 861.15 a kg, down 0.6%

–Lead was at INR 180.15 a kg, down 0.2% 

–Zinc was at INR 267.95 a kg, down 0.8%

Trading levels for the day on the MCX:

-Aluminium contract seen at INR 254.60-INR 261.90

-Copper contract seen at INR 852.10-INR 875.50

-Lead contract seen at INR 178.70-INR 181.60

-Zinc contract seen at INR 264.00-INR 273.00

End

US$1 = INR 87.26

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

Edited by Rajeev Pai

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