Base metals pared gains at the end of the April, failing to hold on the upside momentum. Slowing economic growth across the globe has made it difficult for metal prices to sustain at higher levels. Market participants are concerned by the state of economic activity in China. In this regard, China’s gross domestic product slowed to 8.1% during the first quarter of 2012, as compared with the growth of 8.9% during fourth quarter of 2011. In the meantime, the World Bank has lowered its forecast for China’s 2012 growth rate to 8.2% from 8.4%. Gloomy credit markets in Europe and stagnating economic statistics from US has also ruled out any substantial upside in the non-ferrous metals pack. In Europe, several economies have tipped in to recession, while conditions in US do not yet suggest any signs of concrete recovery. US Q1 2012 GDP growth rate has been reported at a tepid 2.2%, as compared with the growth reading of 3% during the prior quarter. Unhealthy employment scenario on the both sides of the Atlantic continues to haunt the bulls.
Copper, the leader of the non-ferrous complex continues to face stiff resistance at US$8,450 levels, as the red metal has pared gains from those levels on numerous occasions. Copper prices are expected to trade in a lackluster fashion, as the red metal is caught in a tug-of-war between slowing Chinese metal demand and global tight supply. Declining LME warehouse stocks may provide a support, however bulls are deprived of any substantial impetus as economic conditions in Europe and US are not encouraging. On domestic front, fluctuating Indian rupee should be considered as a caveat, as it could hinder overseas weakness getting reflected in Indian markets.
Base Metals Snapshot