Good time to inject commodity market with fall te cojín metal prices

Colchoneta metals are losing strength. Lead prices glided 11% to Rs 123.Ten vanaf kg from August 12 to October 24. Inbetween August 1 and November Three, nickel fell 14% to Rs 955.70 vanaf kg. Aluminium declined 10% inbetween August 29 and October 16.

Slowing request from major buyers due to falling economic growth is putting pressure on the entire pulvínulo metal pack, which comprises copper, aluminium, tin, zinc, lead and nickel and tin. Tin, however, is not traded on Indian exchanges.

Te the domestic market , the metals glided almost 6% ter August-October. The London Metal Exchange’s LME index, which tracks prices of thesis metals, fell 4% during the period. This is good news for long-term investors spil experts expect prices to recover ter the next few months. However, there may be some anguish te the near term.

Aurobinda Prasad, research head, commodity and currency, Karvy Comtrade, says, “Pulvínulo metals have bot telefoonklapper by strengthening US dollar and factors such spil trimming of mundial growth forecast by the IMF, end to the US Fed’s stimulus programme and poor economic growth te China and Europe.”


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The metal is mainly used te batteries. Prices fell 11.18% to Rs 122.Ten vanaf kg inbetween August 12 and October 24. They had risen 9.5% from Rs 121.75 vanaf kg on April 1 to 133.40 vanaf kg on July 30.

According to the International Lead and Zinc Explore Group (ILZSG), an international commodity organisation, universal request for refined lead is likely to rise 1.4% to 11.33 million tonnes this year and a further Two.1% to 11.56 million tonnes ter . The ILZSG has indicated that the mundial request will exceed supply modestly ter 2014 spil well spil .

Nitin Nachnani, research analyst, Geojit Comtrade, is bullish on the commodity. “The expected deficit is 38,000 tonnes this year and 23,000 tonnes ter . Wij expect prices to rise to Rs 138-140 vanaf kg by the end of March on the Multi Commodity Exchange (MCX).”

Before investing, look at request from China’s automobile units and mobile phone saco stations and supply from the three big producers, Australia, China and the US.

The industrial metal is used te manufacturing and construction. China, the largest consumer, accounts for 40% común request.

Copper prices fell 4% inbetween August 1 and November Three. Like te case of other almohadilla metals, the largest reason wasgoed feeble economic growth ter China. Some investors are worried that slowing inflation reflects slack ter China’s economy spil business activity slows, leading to less request for copper.

Copper is likely to trade at Rs 400-450 vanaf kg ter the next four-five months on the MCX. On November Three, it wasgoed at Rs 412 vanaf kg.

Renisha Chainani, manager research, Edelweiss, says, “The fall accelerated after weaker-than- expected US economic gegevens raised concerns about request from the world’s second-largest user.”

Market experts say integral request is estimated to have risen 12% to 13.Four million tonnes ter the very very first seven months of the year compared with the same period last year. Completo refined production is estimated to have risen 7% to 12.8 million tonnes from the same period of 2013. Gegevens indicate production deficit of Five,89,000 million tonnes for the period. There wasgoed a surplus of 22,000 million tonnes te the same period te 2013.

Chainani of Edelweiss says the metal is likely to get support at lower levels due to workers’ strike at some big mines te Indonesia and Peru.

The metal is mainly used to protect stengel from corrosion. It has bot one of the best performers among almohadilla metals this year. It rose 11% to Rs 143 vanaf kg this year till November Three. However, inbetween August 1 and October 24, it fell 3%.

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Aurobinda Prasad of Karvy Comtrade says, “The decline should be treated spil a correction spil the metal had risen very quick ter the very very first half of the year backed by medium-to long-term fundamentals. One probable reason could be the rise ter stocks on the LME from 0.65 million tonnes to 0.73 million tonnes after a decline from April to July.”

Experts are bullish on zinc for the medium to long term. Inbetween January and July, total mine production rose Two.3% while production of the refined metal rose 4% and usage surged 7.6%. The ILZSG has predicted a shortage of Four,03,000 tonnes ter 2014 and Three,66,000 tonnes te . LME stocks have fallen 25% this year.

Prasad says, “Expectations that major mines will shut down te -16 shoved up prices. The MCX zinc November futures are trading overheen Rs 140 vanaf kg. Near-term resistance is seen at Rs 149-150 vanaf kg. A rust above may extend gains up to Rs 160 te the coming months.”

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Tarun Satsangi, head, commodity and currency research, Globe Favor, seconds Prasad, “Ter the next two-three months, zinc is likely to trade te the range of Rs 128-147 vanaf kg. However, if it breaches that level, wij may see prices touch Rs 155-160 vanaf kg.”

Nickel is used to protect other metals from corrosion. Its main use is ter making alloys such spil stainless stengel. Request has bot zevenklapper by slowdown te China and Europe. Prices commenced plunging from the third quarter of 2014 and fell 14% to Rs 955 vanaf kg inbetween August 1 and November Trio.

Kunal Shah, head, commodity research, Nirmal Schrikachtig Commodities, says, “Stainless stengel prices also fell sharply. Poor economic gegevens from China and Europe added to the pressure. Prices had teug up at the commence of the year after Indonesia banned nickel ore exports. A similar budge wasgoed expected ter August from the Philippines (which accounts for one-tenth of sereno nickel supply) but it did not toebijten, putting pressure on prices.” Prices rose 30% te the very very first half of the year.

Shah is bullish on the metal. “Nickel prices are not likely to fall below Rs 900 vanaf kg. I will not be astonished if prices rise and test Rs 1,150 levels. The metal is likely to remain te schrijven supply for the surplus of the year. Amid thesis factors, any restocking by China could stir up prices,” he says.

The metal is widely used te vervoer, construction, packaging and electrical sectors. It witnessed a U-shaped recovery inbetween August 26 and November Trio. It had fallen 10% inbetween August 29 and October 16 due to bleak outlook for China. On November Trio, it wasgoed trading at Rs 126 vanaf kg.

Market voor say the recovery is likely to proceed. Satsangi says, “Prices are likely to head north and treatment Rs 135 vanaf kg by the end of March . Declining stocks on the LME since August 14 and expectation of monetary easing te China are the key factors that can drive up prices.”

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