Base Metals Copper and Zinc Price

5. February. 2010
CommodityOnline New

Base metal prices declined on Wednesday as strength in the dollar coupled with fresh concerns of widening European debt convinced investors to cut their risk appetite. Lower risk appetite in the financial markets led to demand for the dollar and the strength in the dollar made base metals look unattractive for holders of other currencies.

Copper prices slipped sharply from a high of $6948 on the LME to close at $6590. Inventories of the red metal declined 675 tonnes but even this factor could not cushion the downside in the red metal as the dollar gained broadly against all currencies.

Global stainless steel maker Outokumpu said that the fundamental scenario still remains bleak and investors might be pricing in a stronger demand recovery. Stock levels in Europe and China are at normal levels and may not require re-stocking immediately.

Base metal prices could face pressure on the downside as the still-fragile phase of economic recovery in the Europe and the US and the limp physical demand from the industrial sector could act as a negative factor on prices.

Base metal prices could come under pressure on the back of a stronger dollar. Risk aversion in the financial markets could lead to lower demand for higher-yielding and riskier investment assets. Concerns over economic recovery could lead to doubts over the pace of demand recovery for base metals.

On the macroeconomic front, the US Dollar could trade with a positive bias on concern that Asia-Pacific region’s economic recovery will slow and European nations may struggle to reduce their debts. This could lead to increased demand for the low-yielding dollar and the US Dollar could strengthen.

Copper – Copper prices are up with immediate support for MCX February contract seen at Rs.297.00. Further below, crucial support is seen at 289.00 levels. Whereas resistance is seen at Rs.308.05 levels & further upwards at Rs. 315 levels.

Zinc - Zinc prices are trading up with immediate support seen at Rs.94.40 levels for MCX February contract whereas crucial support is seen at Rs.92.25 level. Short-term resistance is seen at Rs.98.20 whereas major resistance is seen at Rs 100.90 levels.