Friday, May 22
By Rituparna Ghosh
NEW DELHI – Futures contracts of base metals on the Multi Commodity Exchange of India and the London Metal Exchange fell today as China did not issue a GDP growth target for 2020 amid uncertainties surrounding the coronavirus pandemic, analysts said.
China is the world’s biggest consumer of base metals.
Copper and nickel prices fell over 1% on the MCX, and over 2% on the LME today, while aluminium, lead, and zinc fell nearly 1% on both the exchanges.
According to South China Morning Post, Premier Li Keqiang confirmed at China’s National People’s Congress that the country would not be setting out an economic growth target for this year, due to “the global pandemic and big uncertainties in the economy and trade.
The uncertainties left investors worried over the prospects of metal consumption after China’s economy contracted 6.8% in Jan-Mar.
Rising tension between the US and China also dampened sentiment for industrial metals as the Chinese government today submitted its proposal to enact new security legislation for Hong Kong.
The proposal has been condemned by pro-democracy protestors in Hong Kong as it could stifle the city’s freedoms and also drew warning from US President Donald Trump on Thursday.
Among other factors, the global zinc, lead, and nickel markets also witnessed a supply surplus in the Jan-mar period. Data from the International Lead and Zinc Study Group showed that the global zinc surplus amounted to 240,000 tn, while the lead surplus totalled 19,000 tn, while demand fell by 4.1% and 7.4% on-year, respectively.
Figures from the International Nickel Study Group also showed that the global nickel surplus was at 45,700 tn in the Jan-Mar period.
“There had still been a sizeable deficit during the equivalent period last year,” Commerzbank AG said in a note.
A broad-based strength in the US dollar also weighed on metal prices today as a stronger greenback makes the dollar-denominated base metals expensive for buyers holding other currencies.
At 1730 IST, on MCX, the May futures contract of:
–aluminium was at 129.9 rupees a kg, down 0.6%
–copper at 406.9 rupees a kg, down 1.3%
–lead at 129.2 rupees a kg, down 0.3%
–nickel at 921.2 rupees a kg, up 1.9%
–zinc at 153.8 rupees a kg, down 0.8%
Investors will focus on movement in the dollar index for signs of the economic impact of COVID-19.
On MCX, the May copper contract is seen at 385-420 rupees per kg. The same-month nickel contract is seen at 900-940 rupees per kg, and the zinc contract at 140-170 rupees per kg. The aluminium contract is seen at 120-160 rupees per kg in the evening session, traders said. End
US$1 = 75.95 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Arshad Hussain
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