It’s a mixed show for base metals
Base metals remained comparatively muted on fears that the credit crunch would have a long-term impact on global growth prospects.
By Devangi Joshi, ET Bureau |
MUMBAI: Gold and crude oil have been trading in a wide range this week on the back of a softer dollar coupled with the uncertainty in the financial markets.
However, base metals remained comparatively muted on fears that the credit crunch would have a long-term impact on global growth prospects. ���While the softness in the dollar continues to give some pullback to base metals, steady demand from China has subdued the gains,��� said Praveen Singh, a research analyst with Sharekhan Commodities. He said that copper and nickel are trading with a negative bias while zinc and lead are trading in a range with an upward bias.
Copper demand has shown a sluggish trend in the third quarter. Prices have been impacted by muted demand from China, which is the world���s largest consumer, and frequent disruptions at miners.
Also, recent developments in the global financial markets have fuelled concerns of a slowdown in major economies including China. The People���s Bank of China cut its key one-year lending rate to 7.20% from 7.47% in the past week, the first reduction in six years, signalling a shift in policy to support growth.
Meanwhile, nickel has also came under selling pressure on breach of the key support level of $17,000 per tonne on LME.
���Sluggish stainless steel demand continues to weigh on nickel. $17,000 is seen as a crucial support for LME prices. If nickel fails to show a rebound from this level, there could be a considerable declines in prices. In this scenario, the September contract on MCX could fall towards Rs 720 per kg,��� said research analyst Navnit Damani.
These views are backed by trends in LME warehouse inventories. While copper and nickel inventories have shown a significant build-up from the start of the month, zinc and lead stockpiles have declined.
LME zinc is trading closer to a strong support range of $1,670-1,650 per tonne and most market participants expect a rebound from these levels. For lead, inventory declines have been significant at nearly 23% in the past one month.
However, base metals remained comparatively muted on fears that the credit crunch would have a long-term impact on global growth prospects. ���While the softness in the dollar continues to give some pullback to base metals, steady demand from China has subdued the gains,��� said Praveen Singh, a research analyst with Sharekhan Commodities. He said that copper and nickel are trading with a negative bias while zinc and lead are trading in a range with an upward bias.
Copper demand has shown a sluggish trend in the third quarter. Prices have been impacted by muted demand from China, which is the world���s largest consumer, and frequent disruptions at miners.
Also, recent developments in the global financial markets have fuelled concerns of a slowdown in major economies including China. The People���s Bank of China cut its key one-year lending rate to 7.20% from 7.47% in the past week, the first reduction in six years, signalling a shift in policy to support growth.
Meanwhile, nickel has also came under selling pressure on breach of the key support level of $17,000 per tonne on LME.
���Sluggish stainless steel demand continues to weigh on nickel. $17,000 is seen as a crucial support for LME prices. If nickel fails to show a rebound from this level, there could be a considerable declines in prices. In this scenario, the September contract on MCX could fall towards Rs 720 per kg,��� said research analyst Navnit Damani.
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These views are backed by trends in LME warehouse inventories. While copper and nickel inventories have shown a significant build-up from the start of the month, zinc and lead stockpiles have declined.
LME zinc is trading closer to a strong support range of $1,670-1,650 per tonne and most market participants expect a rebound from these levels. For lead, inventory declines have been significant at nearly 23% in the past one month.
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