The Base metals complex opened up positive yesterday, but later during the day the metal prices pushed lower with Surplus data in copper. Despite of positive cues from LME Inventories the prices failed to maintain, especially Zinc and Lead.

Despite the upbeat tone in the economically sensitive industrial metal, the macro picture remained cloudy after data showed Japan's economy shrank at a record pace in the first quarter.

The world copper market saw a surplus of 86,000 tonnes in February, compared with a deficit 61,000 tonnes in February 2008, an industry report showed on Wednesday. World usage in the first two months of 2009 declined by 4.4 percent (130,000 tonnes) from that in the same period of 2008 as China's apparent usage growth of 33 percent was more than offset by a significant decrease in usage in the other three major consuming regions, the EU-15 countries, Japan, and the United States, of 25 percent,
44 percent, and 25 percent, respectively. World usage outside of China declined by 18 percent

A fresh fall in LME warehouse stocks of copper, used extensively in the power and construction industries, helped offset some demand concerns with stocks down 7,350 tonnes to 341,475 tonnes.

However, canceled warrants -- material earmarked for delivery fell, raising questions about buying by China, the world's largest consumer of copper. Investors now fear Chinese demand, which has helped lift copper prices more than 50 percent so far this year, was merely government and consumer stockpiling that is now starting to subside.

Base Metals: We expect profit taking in base metals as no evidence of robust demand at these rates but weaker dollar will prevent the sharp decline in metal prices.

Copper: Copper prices for past few session are trading range bound. Looking at the ADX and rising –DI, Copper prices are expected to push lower to 218, and breaking this level can further trigger down side till 212. Thus one can remain short in copper around 220 levels.

Zinc: Zinc prices sharply declined yesterday, inspite of support from the medium term support line at 70.5, thus zinc is expected to decline further to 68 levels during the day.

Lead: Lead have given a sharp decline yesterday evening, despite of long consolidation between 69-74.5. thus now lead prices can fall further to the support of neckline of the Head and Shoulder formation at 66.

Nickel: Nickel prices are seen taking rest between 612 – 598 levels. Looking at the negativity in entire Base metals Complex and the Cross over in the RSI indicates weakness in Nickel prices. Breaking 598 levels during the day can push prices lower to 572-75 levels.

However, if prices move below 572, new selling can come in Nickel for 545-550 levels. Thus one can Buy nickel only above 612 levels.