Base metals producers are not sure whether the market would hold on to recent gains after crossing resistance level.
Although previous rallies have been marked by producers dumping the metal and booking profits, the ongoing inventories drawdowns and impending labour negotiations should see prices up in coming days, analysts said.
Fund investors increased holdings coupled with supply disruptions and possibilities of demand growth helped surge base metals to all time highs in the LME on Wednesday. Zinc jumped to record for second day and aluminum advanced to a 17-year high.
Copper was fuelled mainly due to apprehensions of supply disruptions from Grupo Mexico SA, the world’s seventh-largest copper producer, which assured buyers that it can’t meet obligations for deliveries to customers in May due to striking workers.
The Chinese economy, the world’s largest consumer of metals, grew at a faster-than-expected pace in the first quarter, fuelling expectations of increased metals demand.
Copper on the LME settled at $6,560 ($6,635) while tin, aluminium, nickel, lead and zinc closed at $9,130 ($8,875), $2,698 ($2,619), $18,205 ($18,600), $1,176 ($1,149.5) and $3,215 ($3,182) per tonne respectively.
Domestic market, however, moved only in upward direction with copper products took the lead. Copper wire bar jumped by Rs 20 to Rs 375 (Rs 355) per kg while armiture surged Rs 7 to Rs 345 per kg. Despite heavy buying continued in copper heavy which lifted the price up by Rs 7 to Rs 353 per kg.
Marginal jump of Rs 1.50 to Rs 132.5 per kg was witnessed in aluminum ingot due to volatility in the prices in the international market.
Copper for delivery in three months climbed 0.9 per cent or $60 to $6,510 a metric tonne in early trade on Wednesday after reaching $6545, the highest ever.
The red metal recorded an overall gain of 16 per cent this month. Zinc too jumped 2.6 per cent to record $3195 a tonne followed by aluminum which rose 2.2 per cent to $2772 per tonne , a level last seen in August 1988.
Prices have been buoyed by a decline in global inventories and strikes at mines. Grupo Mexico is losing daily production of about 1,100 tonne of copper due to strike.
Aluminium has reasons to grow as Alcoa Inc., the world’s largest aluminum producer, may face production difficulties and reduced shipments if the labour contracts are renewed for the current year.
The company sources said that the management of Alcoa and representatives of the United Steelworkers of America are expected to meet on May 18 in St. Louis to renegotiate the contract for a fifth of the company’s 45,000 US workers.
Zinc is also growing due to declining inventories which has plunged 31 per cent this year, totaling 270,300 tonnes, or less than 10 days of global consumption.
AUL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
