Base metals witnessed correction during yesterday session where most of them fell by 3-4%. Weak housing numbers coupled with rising jobless claims raised concerns about demand for non ferrous metals.

Japan's output of rolled copper products fell by a record 60 percent from a year earlier in March, data showed on Friday, illustrating the sharp collapse in industrial demand from the world's fourth-biggest consumer. Japan's output of rolled copper products fell to 32,338 tonnes in March on a seasonally adjusted basis, down 60.2 percent from a year earlier, preliminary industry data from the Japan Copper and Brass Association showed.

Copper prices have risen more than 41 percent in London and around 50 percent in Shanghai so far this year, thanks mostly to China's restocking. But those gains may soon thin on concern Chinese buying will not be as aggressive as in the first quarter.

Demand for refined copper is being distorted by stockpiling by China's State Reserves Bureau (SRB) which is thought to have contracted to buy around
300,000 tonnes of copper cathode in the first quarter of 2009 and by falling scrap imports which fell nearly 40 percent to 329,326 tonnes last month Imports of refined copper by China, the world's largest consumer accounting for about 30 percent of global demand, rose to a record high of 296,843 tonnes of refined copper in March, up 137.6 percent from a year ago. Freeport-McMoRan Copper & Gold Inc <FCX. N sees Chinese purchases of copper continuing to support prices of the metal for the long term, even though its buying practices could cause price volatility in the near term.

Spot lead concentrate treatment charges paid by overseas sellers to Chinese smelters are likely to rise as top buyer, China, is cutting purchases in a bid to raise revenues, traders and analysts said on Wednesday. Falling concentrate imports may limit Chinese lead smelters' metal production in coming few months and further cut the world's top lead producing nation's exports, which already fell 93 percent on the year to just 395 tonnes in March.

The global zinc market will be in a surplus of just over 260,000 tonnes this year as demand records its biggest fall since 1975, the International Lead and Zinc Study Group (ILZSG) said on Thursday. The Group currently anticipates that world supply of refined zinc metal will exceed demand by just over
260,000 tonnes in 2009.

The global lead market will be in a 37,000-tonnes surplus this year, with supply and demand closely matched, the International Lead and Zinc Study Group (ILZSG) said on Thursday. The Lisbonbased ILZSG said it expected world refined lead output to fall by 0.9 percent to 8.60 million tonnes and demand to fall by 1.1 percent to 8.56 million tonnes. Refined production is expected to fall for the first time since 2001, with declines of 4 percent and 3.3 percent predicted in Europe and the United States respectively.

After yesterdays steep fall we expect copper prices should take support at Rs. 213/kg levels and may not go beyond that. We believe today the probability to durable goods order report to be better than expected is higher so metals during evening session may move up.

Copper: Copper moved lower to 217.45, after breaking 225 level, just as we forecasted. Copper prices are weak at current levels; prices can fall further to
210-12 levels.

Zinc: Zinc prices fell below 70 levels yesterday, as we forecasted. Prices are still weak at current levels below 70, support can be seen today around 67.5 levels. Thus Selling can be done for target 67.5-68.

Nickel: Nickel prices breaking the 560 levels showed further weakness. Thus weakness still persist, next support in Nickel can be seen at 535 levels. Thus one can adopt selling at rise strategy with SL of 565.

Lead: Lead prices moved down, but not in the magnitude of that of other base metals. Lead is seen taking support at Middle line of the Bollinger Band at 70 levels. Thus fresh selling in lead can be done on breaking 70 on downside.