Informist, Monday, May 22, 2023
By Sandeep Sinha
MUMBAI – Future contracts of all base metals fell on the Multi Commodity Exchange of India and the London Metal Exchange as market sentiment weakened on concern about the US government’s debt ceiling crisis.
Investors remained wary ahead of US President Joe Biden and House Speaker Kevin McCarthy's meeting later today to avert a catastrophic US debt default.
"Markets living on a hand-to-mouth basis and ours being such a short-term world, a turn when it comes will likely materialise quicker than anyone can anticipate, but in the here and now the reality is that we remain under pressure," Al Munro at broker Marex said in a note.
The fear of slowing demand in top consumer China after a series of weak macroeconomic data also weighed on base metals prices. Chinese industrial output, retail sales and fixed investment grew at a much slower pace than expected in April, diminishing optimism of a post-COVID recovery.
The People's Bank of China today kept its five-year loan prime rate unchanged at 4.30% and its one-year loan prime rate steady at 3.65% for the ninth successive month. The move was in line with analysts' expectations and dragged the yuan lower. A weaker yuan makes dollar-denominated base metals expensive for Chinese buyers.
Investors are now looking forward to the release of US core personal consumption expenditure and preliminary GDP data later in the week for further cues.
ALUMINIUM prices fell following the unwinding of long positions by traders on the domestic exchange.
COPPER prices slipped because of concerns about demand in China and a slowdown in global economic activity. The rise in stocks by 275 tn at LME-approved warehouses also hurt prices.
LEAD contracts fell as traders increased their short positions on the domestic bourse.
ZINC contracts underperformed other non-ferrous metals on the downside on account of profit-taking.
* At 1710 IST, on the MCX, the May futures contract of:
–Aluminium was at 209.05 rupees a kg, down 0.6%
–Copper was at 717.60 rupees a kg, down 0.9%
–Lead was at 183.50 rupees a kg, down 0.2%
–Zinc was at 222.95 rupees a kg, down 1%
* Outlook for the evening session on the MCX:
–Aluminium contract seen at 208.20-209.90 rupees
–Copper seen at 713.40-722.40 rupees
–Lead seen at 182.60-184.60 rupees
–Zinc seen at 220.30–225.80 rupees
End
US$1 = 82.82 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Rajeev Pai
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