Informist, Monday, Apr 11, 2022

By Sandeep Sinha

MUMBAI – Futures contracts of most base metals on the Multi Commodity Exchange of India and the London Metal Exchange fell today due to COVID-19 related restrictions in China and a sell-off in equity markets.

* Aluminium and copper semi-fabricators were forced to cut down production due to raw material shortages and a build-up of finished product inventories. The difficulty in moving goods owing to tighter rules further exacerbated the concerns over demand. 

* “Sentiment among market participants is clearly being dampened by the ongoing surge in coronavirus cases in China, which is sparking concerns about demand in the world’s leading consumer of metals by far”, Commerzbank AG said in a report.

* ALUMINIUM had fallen 20% from the recent highs as a decline in crude prices lowered the production cost for smelters. Energy constitutes approximately 40% of the production costs for aluminium.

* The sentiment was also dampened by a stronger dollar against a basket of currency. The dollar index today climbed to a fresh high of 100.20 and touched the highest level since March 2017. A stronger greenback makes dollar-denominated industrial metals more expensive for holders of other currencies.

* However, the constant decline in LME inventory amid tight supply and hope of further stimulus measures from China to arrest the slide in economic growth limited the downside for metal prices.

* COPPER prices slipped as traders increased their short bets on the domestic bourse. The rise in LME inventories by 1,825 tn also hurt market sentiment.

* NICKEL contracts fell on weak cues from LME and concerns over demand.

* At 1655 IST, on the MCX, the April futures contract of:

 --Aluminium was at 268.85 rupees, down 2.8%

 --Copper was at 816.95 rupees a kg, down 0.4% 

 --LEAD was at 185.75 rupees a kg, down 0.1%

-- Nickel was at 2,450 rupees a kg, down 0.6%

 --ZINC was at 362.40 rupees a kg, up 0.9%

* Outlook for the evening session on the MCX:

 --Aluminium contract seen at 265.5-276.8 rupees per kg

 --Copper seen at 810.0-826.0 rupees per kg

 --Lead seen at 181.0-188.25 rupees per kg

 --Nickel seen at 2,210.0–2,660.0 rupees per kg

 --Zinc seen at 357.0–367.0 rupees per kg

End

US$1 = 75.95 rupees

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

Edited by Tanima Banerjee

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