Base Metals Trading Tips and Commodity Market Update: Nirmal Bang

copperMost of the metals ended the day on a downward note taking cues from the worsening Swine flu situation and weakening demand outlook across the globe. The worst hit was nickel, shedding $575 and closing the day at a three week low of $10800 on LME .

Latest data from the International Copper Study Group (ICSG) confirmed the gloomy demand outlook. ICSG said the world copper market saw a surplus of 155,000 tonnes in January, compared with a deficit of 22,000 tonnes in January 2008.

LME copper stocks have been falling since February and on Tuesday, dropped by 5,000 tonnes to a three-month low of 420,275 tonnes. Canceled warrants rose to 70,125 tonnes from 67,600 tonnes the day before, signaling that the metal is headed for China, the world's biggest copper consumer.

Zinc output at Australia's Century mine fell 1.8 percent to 101,961 tonnes in the first quarter due to the heaviest rains in a decade, owner OZ Minerals Ltd said on Wednesday. OZ has previously said it will reduce production at the mine by 4 percent overall in
2009 to combat slowing demand for the anti-corrosive metal from steel makers. The mine produced 125,333 tonnes in the previous quarter. The cut represents just a quarter of one percent of world output, and would do little to combatcrippling supply gluts.

The global zinc market was in surplus by 56,000 tonnes in the first two months of 2009, the International Lead and Zinc Study Group said this month. LME zinc stocks ballooned 36 percent or 93,000 tonnes in the Jan-March quarter to 345,000 tonnes, roughly 12 days of global consumption of the metal, used in galvanizing steel.

In spite of consistent negative inventories, prices are moving southwards Chinese buying was seen fading and investors are worried about the recent outbreak of Swine Flu which is a threat to already fragile world economy. Due to weaker INR we might see some upside initially but rallies should be sold during the day. We recommend selling non ferrous metals at rise during the day.

Copper didn't breach the strong support at Rs. 211.5 and bounced back from there. We believe 211.5 is a strong support for copper and it may not breach that and may go up to Rs. 217.50-218.50. The upside is capped at Rs. 223.6. We don’t see copper being bullish, though a slight bounce back may happen after yesterday’s sharp sell offs.

Zinc showed a lot of mettle during yesterday’s trading session despite of sharp downside in copper, nickel and lead. Zinc prices managed to sail with minimum losses and we believe prices may not go below Rs. 65.8 and test Rs. 68.5 during today’s trading session. We don’t recommend selling zinc as it is already in an oversold zone and prices are expected to bounce back from present levels.

Nickel finds good support at RS. 534.5 where the 100% retracement is completed. It has shown major weakness technically. We recommend selling nickel on rallies.

General: 
Analyst Views: