Base metals that rose to the highest levels earlier began to ease during the mid morning session on Wednesday, 2nd May after trading in range bound during the morning session, hurt by the contraction in manufacturing activity and increase in employment rate of euro zone. Meanwhile, the concerns over the Chinese demand also added to the pessimistic tone. Meanwhile, the stronger dollar also weighed down the sentiment.
In regards to the US manufacturing data that showed an expansion in March, investors were mostly awaiting for the ADP unemployment data and factory orders data of US due later today.
LME Copper dropped by 1.4% at $8313.5 per tonne on Wednesday and Comex Copper future for the most active July contract was trading at $3.7955 a pound, down 1.3% (5 cents). SHFE Copper future for most active August 2012 contract settled at 58750 yuan per tonne, up by 0.5% (280 yuan). Likewise at MCX, Copper for delivery in June was trading lower by 0.6% or Rs 2.7 at Rs 445.15 per kg.
The dollar index surged by 0.6% at 79.24 against the basket of 6 major currencies as the global economic uncertainties pertaining to Euro zone reducing the risk appetite and favoring the safe haven dollar.
Euro zone PMI manufacturing showed widening contraction to 45.9 in April from 47.7 in March, where the reading in Germany came in at 46.2 from the previous of 48.4. In Italy, the index retreated to 43.8 from 47.9 in March.
Euro area unemployment reached 10.9% in March from 10.8% in February, buoyed by the tremendous rise in Spain's unemployment to 24.4%, marking the highest level since 18 years, on the back of the sharp austerity adopted by the government to trim budget shortfall to target. Unemployment across the 17-member euro zone rose by 169,000 in March.
In industrial metal news, China's Minmetals Resources reported that its copper mine in Democratic Republic of Congo would fall short of production targets due to power disruptions. Disruptions resulted in the rescheduling of mining operations and a reduction in ore mining as there has been inadequate power to ramp up production.
Large Chinese copper smelters and trading firms have agreed to deliver refined copper cathodes to the London Metal Exchange in the next two months in an effort to boost the availability of copper in the global market, as per Jiangxi Copper International Trading Co Ltd.
Chinese lead demand will increase by 7.3% in 2012 while its production is expected to reach 2.54 million tonnes, accounting for 52% of world output, as per International Lead and Zinc Study Group (ILZSG) in its current outlook for trends in world supply and demand for lead during 2012.
Among other metals at LME, Aluminium was trading lower by 0.6% at $2104.75 per tonne and Lead dropped by 1% at $2147 per tonne. Nickel shed by 1.4% at $17506 per tonne and Zinc was also sliding by 0.6% at $2043.5 per tonne.
Among other metals in the domestic market at MCX, Aluminium was trading flat at Rs 110.95 per kg and lead was dropping by 0.3% or Rs 0.35 at Rs 113.7 per kg. Zinc was trading flat at Rs 108.05 per kg. Nickel for delivery in May tested an intraday high of Rs 951.5 per kg and low of Rs 932.5 per kg and is trading at Rs 933.8 per kg, down 0.7% or Rs 6.5.
Powered by Commodity Insights