Base Metals Trading Tips and Commodity Market Update: Nirmal Bang

copper wireNickel was the only metal which witnessed a rise in base metals complex on the ground of a draw down in LME inventory, a marginal increase in cancelled warrants and announcement of a production cut by Vale, one of the world’s largest producer of Nickel. It surged by Rs. 10.9, settling down at Rs. 642.40. Copper and Zinc dropped by
1.9% and 2.2% and ended the day at 234 and 76.55 respectively on MCX.

Vale, one of the world’s largest producer, slowed development of nickel production projects in the last period, including a year’s delay of Onca Puma in North Brazil. Copper scrap buyers in China, the world’s biggest user of the metal, have doubled their offers, signaling deterioration in supply and putting a floor under prices on the London Metal Exchange.

Copper for three-month delivery in London has climbed 52 percent this year as China almost doubled imports in the first quarter. Because of a shortage of scrap metal, copper users worldwide may buy as much as 1 million metric tons of the refined metal instead of scrap, according to Barclays Capital.

Prices of copper, zinc, tin and silver, which account for 60 percent of Peru’s export revenue, have all dropped at least 22 percent since early July on declining demand. “For the highest grade of copper scrap, today you would get between $200 and $250 over LME,” Robert Voss, president of Brussels-based European Metal Trade and Recycling Federation, or Eurometrec, said. The premium was as much as $100 in March.

“There are very thin chances of a summer slump in copper prices and that’s because of the tight scrap supply and any decline below $4,000 a ton is unlikely to be for long Barclays reports.

Base metals are expected to trade soft during the day, We recommend selling copper on a rise of 1-1.5% but in Zinc, and we remain contrary to our view on base metals.

Any decline in Zinc should be used as good buying opportunity. Nickel too may witness selling pressure and may test Rs. 635/kg levels during the day

Copper looks weak technically and we look to go short in the range between RS. 238-239 with a stop loss of 241.50 Targeting 234.50-233.

Zinc may test Rs. 75.20-30 but looks strong. Only a drop in RSI is not seen as major bearish signal. We recommend going long in Zinc at decline.