Informist, Monday, Jul 31, 2023
By Sandeep Sinha
MUMBAI – Most base metals futures rose on the Multi Commodity Exchange of India and the London Metal Exchange on the back of improved risk appetite and better-than-expected economic data from top consumer, China.
Data by China’s National Bureau of Statistics showed the country’s official manufacturing purchasing managers’ index rose to 49.3 in July from 49 in June, but remained in contraction territory for the fourth successive month. The numbers were better than market expectations of 49.2. A reading above 50 indicates expansion in economic activity and a figure below 50 signals contraction. The country is the biggest user and consumer of non-ferrous metals.
The positive sentiment in non-ferrous metals was also aided by China’s National Development and Reform Commission today proposing 20 measures to restore and boost domestic demand.
“Base metals climbed on Monday on fresh optimism over Chinese demand. China’s leadership has promised more policy support for the real estate sector and a reduction in the local government debt burden, which are expected to boost the demand for industrial metals,” said Saumil Gandhi, senior analyst-commodities at HDFC Securities.
While reducing worries over the US recession on account of stronger than expected US GDP numbers also improved investor sentiment. We believe market participants will keep an eye on manufacturing purchasing managers’ index data from the US and Europe and the details of stimulus measures from China, which could drive further momentum in base metals, Gandhi said.
However, further upside in the base metals was limited by a firm dollar, which makes dollar-denominated commodities expensive for holders of other currencies. The dollar index, which measures the strength of the greenback against a basket of major currencies, was up 0.1% at 101.74.
Investors will take further cues from the US nonfarm payroll data to be released on Friday.
ALUMINIUM prices rose due to a fall in stocks by 1,600 tn at LME-accredited warehouses. Market players increasing their long positions on the domestic exchange also aided prices.
COPPER prices rose due to a decline in inventory by 16,608 tn to 61,290 tn at Shanghai Futures Exchange last week. The positive cues were also supported by comments from Codelco, the world’s largest copper producer, which lowered its 2023 production guidance to 1.31-1.35 mln tn from 1.35-1.42 mln tn due to damage to its underground mine at El Teniente and expectation of further production halts in Jul-Dec.
LEAD contracts were flat due to lack of fresh triggers.
ZINC contracts rose as cancelled warrants of the metal earmarked for delivery from LME’s Singapore warehouse surged to 35,150 tn.
* At 1815 IST, on the MCX, the August futures contract of:
–Aluminium was at 202.0 rupees a kg, up 1.1%
–Copper was at 751.15 rupees a kg, up 1%
–Lead was at 184.30 rupees a kg, unchanged
–Zinc was at 225.35 rupees a kg, up 1.9%
* Outlook for the evening session on the MCX:
–Aluminium contract seen at 199.90-203.50 rupees
–Copper seen at 742.0-755.0 rupees
–Lead seen at 183.0-185.50 rupees
–Zinc seen at 222.0–228.0 rupees
End
US$1 = 82.24 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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