Informist, Monday, Oct 25, 2021
By Sharathkumar Nair
MUMBAI – Base metal contracts are expected to trade higher this week on the Multi Commodity Exchange of India and London Metal Exchange due to a supply crunch caused by the power crisis in China, the top producer of base metals in the world.
* Coal shortages in China, which is heavily reliant on electricity produced by burning coal, have led to a power crisis in the country.
* China, the world’s biggest emitter of greenhouse gases, aims to become carbon-neutral by 2060. In order to achieve this ambitious goal, energy-intensive industries such as steel, ALUMINIUM, cement and oil refining should ensure that more than 30% of their production capacity meets tighter energy efficiency standards by 2025, National Development and Reform Commission, China’s top economy planner said.
* Strict emission controls have been imposed on various industries by Chinese authorities, forcing manufacturers to reduce production in order to meet their annual emission targets, experts said.
* Low production has created tightness in the supply of base metals globally, which will likely help keep prices of base metals higher, said Sriram Iyer, a senior research analyst with Reliance Securities.
* Aluminium prices are likely to rise due to low production in China, which is the top producer of the metal in the world. The country’s aluminium production decreased to 3.18 mln tn in September from 3.29 mln tn in August, data released by the International Aluminium Institute showed.
* Rising energy costs in Europe have affected metal smelting operations. Various smelting companies have decided to reduce their output as it is no longer economically feasible for them to continue manufacturing due to rising costs.
* Nrystar, a major producer of ZINC, has decided to cut production by up to 50% at its three smelting units based out of Europe, due to rising electricity costs.
* Chinese property company Evergrande resumed construction work on more than 10 projects in six cities in China, boosting market sentiment as investors were worried of a possible collapse caused by the company’s inability to service its debt of over $300 bln.
* Demand for base metals from China is likely to pick up due to construction activities gaining momentum. China’s realty sector is one of the largest consumers of base metals such as aluminium and COPPER.
* Container shortages and rise of new COVID-19 variants across the globe are likely to disrupt supply chains, pushing base metal prices higher.
* Following are the prices of three-month futures contracts of base metals on the LME in dollars per tn, the change in percentage terms, and the weekly support and resistance levels:
* Following are the prices of the most active contracts of base metals on the MCX, in rupees per kg, percentage change from the previous close, and the expected weekly support and resistance levels:
End
US$1 = 75.03 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vidhi Verma
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Source: Cogencis
