Commodity Base Metals- Outlook

Base metal prices ended mixed with copper and nickel ending modestly higher while all other ended lower with losses of anywhere between half to one percent. People’s Bank of China raised reserve requirement ratio by 50 bps as the country tries to lower inflation levels which is now at 25 month high of 4.4 percent and way above its comfort level of 3 percent. On Friday, US equity markets ended higher by 0.2 percent and gains were capped owing to rise in reserve requirements by

China. Reports over the weekend indicated that Ireland is now seeking bailout from ECB and IMF and might soon accept an aid. However the quantum as of now is not known. This has sent the dollar index lower by nearly 0.5 percent and is currently

trading at 78.13. Weak dollar index has sent base metal prices higher in the morning session on LME. Currently base metals are trading with gains of anywhere between one to two percent. Most of the Asian equity markets are also trading higher with the exception of HangSeng where property shares are weighing on market as a result of hike in stamp duty and taxes. On the economic data front, Chicago Fed National Activity index and euro zone consumer confidence are expected to contract. Overall, given the weak dollar index and positive equity markets we expect base metal prices to remain on the higher side.

Posted in: Base Metals Outlook,MCX Review