Base metals extended their gains on LME and Comex due to drop in inventories, increased optimism in financial markets and expectation of further Chinese buying. Three-month copper on the London Metal Exchange fell to $4731 per tone down by $72 after closing up $74 on Friday.

China's refined copper output slipped 0.2 percent from February's three-month high to 319,400 tonnes as producers ran short of copper scrap, a raw material, and smelters held back from full production because of weak demand. Jiangxi Copper's March output fell to 61,700 tonnes from 63,400 tonnes in February, while Jinchuan Group's production fell to 27,200 tonnes from 34,800 tonnes, more than offsetting an increase at No. 2 producer Tongling Nonferrous, which raised production from 51,300 tonnes to
56,700 tonnes.

Cash copper on the London Metal Exchange flipped into a premium or backwardation of $10/$14 a tonne versus the three-month price, reversing after six months of discount.

China is now seriously oversupplied with copper due to restart in production and imports. We believe that prices may correct during the day. Nickel and Lead still look strong for the day.

Copper prices have rallied upwards 18 % from the 206 levels, thus we expect a correction in copper.

Looking at copper chart, We find the prices trading below the trend line. Thus today we see copper trading lower till 233-234 level. (i. e 23.6% retracement). If prices break
233 level on the downside, 227-28 can be the next lower target. However, this 227-28 level can be seen as a buying opportunity by positional buyer.

Nickel prices also have seen a continuous upward rally right from 557 to 637. The prices right now are seen encountering a resistance at upper level after a high of 637, thus a correction is expected to the range of 600-606. Thus one can sell Nickel between 630-633, with a target of 606-00 and a stop loss of 638.