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Informist, Thursday, Apr. 3, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of most base metals fell on the Multi Commodity Exchange of India and the London Metal Exchange Thursday due to concerns about demand after US President Donald Trump announced sweeping reciprocal tariffs against more than 60 countries and territories. Investors are worried that a potential trade war could derail global economic growth and hurt demand for metals.

The reciprocal tariffs sparked fear of a recession in the US and a global economic slowdown. Some of the US' top trading partners, such as China, the European Union and Vietnam, have been hit the hardest with substantially higher tariffs. Trump slapped 34% tariff on China, 46% levy on Vietnam, and 32% tariff on Taiwan. The new reciprocal rate on China adds to the existing tariffs totalling 20%, bringing the tariff rate on Beijing to 54%.

"The selloff was driven by fears that sweeping US tariffs, announced by Trump, could stall global growth and weaken industrial metal demand," Kotak Securities said in a report.

However, a sharp fall in the dollar index and a drop in inventories at Shanghai Futures Exchange cushioned the downside in base metals prices. At 1728 IST, the Dollar Index, which measures the strength of the greenback against a basket of six major currencies, was down 2.0% at 101.64. A weaker dollar makes commodities such as base metals, which are priced in the greenback, cheaper for buyers holding other currencies, aiding demand.

ALUMINIUM inventories at Shanghai Futures Exchange-monitored warehouses dropped by 21,483 tonnes to 215,074 tonnes and COPPER inventories fell by 9,560 tonnes to 225,736 tonnes. LEAD stocks fell by 2,166 tonnes to 65,796 tonnes and ZINC inventories declined by 3,693 tonnes to 68,543 tonnes.

Positive economic data from China also limited the fall in base metals prices. The Caixin China Manufacturing Purchasing Managers' Index rose to a four-month high of 51.2 in March from 50.8 in the previous month. This marked the sixth successive month in which the index was above the 50.0 mark, signalling an improvement in manufacturing sector conditions. A reading below 50 indicates a contraction in economic activity while a number above 50 signals expansion.

For further cues, market participants await the US final services Purchasing Managers' Index and the US Institute for Supply Management's services purchasing managers' index, both due later in the day.

At 1734 IST, on the MCX, the April futures contract of:

-–Aluminium was at INR 239.70 a kg, down 1%

–-Copper was at INR 873.20 a kg, down 2%

–-Lead was at INR 179.15 a kg, up 0.6%

–-Zinc was at INR 259.80 a kg, down 1.7%

Trading levels for the day on the MCX:

--Aluminium contract seen at INR 235.00-INR 244.00

--Copper contract seen at INR 867.00-INR 892.00

--Lead contract seen at INR 174.00-INR 182.00

--Zinc contract seen at INR 255.00-INR 266.00

End

US$1 = INR 85.43

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

Edited by Ashish Shirke

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