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Weekly Base Metals Outlook:Mixed; China power issue to support price

Informist, Monday, Oct 11, 2021

 

By Sharathkumar Nair

 

MUMBAI – Futures contracts of base metals are likely to trade on a mixed note on the Multi Commodity Exchange of India and London Metal Exchange this week, analysts said. 

 

* Liaoning province in China, the largest provincial economy in the country, warned of worsening power shortages today. The shortage of coal in China has created a power crisis in the country that is heavily dependent on thermal stations which generate electricity by burning coal.

 

* Power restrictions on smelters is affecting the industrial output of metals which will likely keep prices of metals such as ALUMINIUM on higher side as supply of the metal remains tight.

 

* China has been restricting power to metal smelters to meet emission standards as it aims to achieve carbon neutrality by 2060. 

 

* However, the Chinese government has ordered to improve the coal supply to power plants to mitigate the ongoing power crisis in the country.

 

* Three coal regions in China namely Shanxi, Ordos, and Inner Mongolia have pledged to increase coal supply to power plants by 145 mln tn and at a discounted price this quarter, Marex Spectron said in a report.  

 

* Property development companies in China like Evergrande, Fantasia Holdings, and Modern Land(China) Co have been struggling to pay interest to their offshore bondholders. This has weakened market sentiments as investors fear of a possible collapse of these companies causing a slowdown in China’s real-state sector. 

 

* Debt-crisis in China’s realty sector will likely weigh on the prices of base metals. China’s real estate sector is one of the largest consumer of metals such as COPPER and aluminium. 

 

* Investors will eye US consumer price index data scheduled to be released on Wednesday to get further clarity on when the US Federal Reserve will likely begin reduction in its monthly bond-buying programme of $120 bln.

 

* Aluminium contracts are likely to trade higher as global supply remains tight amid steady demand due to power restrictions on aluminium smelters by Chinese authorities.

 

* Copper contracts are likely to fall as concerns over supply tightness from Peru, world’s second-largest producer, eased after locals around Antapaccay mine decided to suspend protests following an agreement to begin talks with the mine. The development is likely to weigh on copper prices. 

 

* NICKEL contracts are likely to rise as production of the metal has been severely affected to due to the ongoing power crisis in China and rising electricity costs in Europe. The global market will witness a deficit of 134,000 tn this year, the International Nickel Study Group said in a report. This will further support nickel prices.

 

* Following are the prices of three-month futures contracts of base metals on LME in dollars per tn, the change in percentage terms, and the weekly support and resistance levels:

 

METAL

PRICE

CHANGE

SUPPORT

RESISTANCE

Aluminium

3,0322.33,0023,062

Copper

9,471.51.39,441.59,501.5

Lead

2,237.70.62,207.72,267.7

Nickel

19,3451.019,31519,375

Zinc

3,191.20.73,161.23,221.2

 

* Following are the prices of the most active contracts of base metals on MCX, in rupees per kg, percentage change from the previous close, and the expected weekly support and resistance levels: 

 

METAL

PRICE

CHANGE

SUPPORT

RESISTANCE

Oct aluminium 

244.32.6214.3274.3

Oct copper

739.71.5709.7769.7

Oct lead

184.51.0154.5214.5

Oct nickel

1,5161.51,484.21,544.2

Oct zinc

272.31.2242.3302.3

 

 

 

 

 

 

 

 

 

End

 

US$1 = 75.35 rupees

 

Edited by Rajendra Masur

 

 

Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

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Source: Cogencis

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