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Informist, Monday, May 12, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of most base metals rose on the Multi Commodity Exchange of India and the London Metal Exchange Monday as the US and China announced a trade deal, lowering tariffs for 90 days. Market sentiment was also lifted by a fall in inventories of most metals at warehouses registered with the LME and the Shanghai Futures Exchange.

The US and China have agreed to suspend most of the tariffs on goods imported from each other for 90 days, effective Wednesday, according to a joint statement released by the White House Monday. The US reduced its reciprocal tariff on Chinese goods to 10% from 125%. With the 20% tariffs announced in February and March against Chinese goods remaining in place, the total tariff against Chinese goods will now be 30%. At the same time, China agreed to cut tariffs on US goods to 10% from 125%.

"This marks a substantial cooling of trade tensions between the US and China; however, questions remain for markets as to what the end game will be, as the measure will be operational for 90 days, and what the eventual level of tariffs will be. Uncertainty is still high, and volatility is likely to remain elevated across commodity markets," analysts at ING said in a report. 

ALUMINIUM inventories at warehouses registered with the Shanghai Futures Exchange fell by 6,192 tonnes on week to 169,665 tonnes in the week ended Friday and COPPER inventories fell by 8,602 tonnes on week to 80,705 tonnes. ZINC inventories fell by 1,375 tonnes on week to 47,102 tonnes. LEAD inventories, however, rose by 2,718 tonnes to 49,504 tonnes. Copper and aluminium stocks at LME-accredited warehouses fell by 1,025 tonnes and 2,025 tonnes to 190,750 tonnes and 401,525 tonnes, respectively.

The gains in base metal prices were capped because of a surge in the dollar index. At 1817 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was up 1% at 101.61. A stronger dollar makes commodities such as base metals--priced in the greenback--expensive for buyers holding other currencies, hence denting demand.

At 1819 IST, on the MCX, the May futures contract of:

–Aluminium was at INR 238.45 a kg, up 2.1%

–Copper was at INR 852.65 a kg, up 0.1%

–Lead was at INR 178.20 a kg, down 0.1% 

–Zinc was at INR 254.50 a kg, up 1.4% 

Trading levels for the day on the MCX:

--Aluminium contract seen at INR 234.00-INR 241.00

--Copper contract seen at INR 841.00-INR 863.00

--Lead contract seen at INR 176.00-INR 180.00

--Zinc contract seen at INR 250.00-INR 258.00

End

US$1 = INR 85.37

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

Edited by Saji George Titus

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