Base metals ends higher on firm equity markets

Commodity Online  Jan 17, 2011--- Lead Lead stocks on London Metal Exchange declined by 450 tonnes as against decline of 550 tonnes on the previous day. Lead market continues to remain in backwardation and the spot prices are trading at a premium of $20 tonne.

Aluminum prices ended lower by half a percent on LME on the back of continued rise in inventories thereby underperforming other base metals. Aluminum stocks on London Metal Exchange for a fifth consecutive day. Stocks increased by 50 tonnes and thereby witnessed moderation in build up. On a weekly basis too stocks rose by massive 162 600 tonnes. Warehouses in China however witnessed decline in stocks to the extent of 8 581 tonnes. Copper Copper stocks on London Metal Exchange declined by 1125 tonnes as against decline of 825 tonnes on the previous day. On a weekly basis warehouses in China however witnessed a modest build up of 481 tonnes while for the whole week stocks declined by a net 3 300 tonnes on LME. Cancelled warrant ratio on LME is at 9 percent of total stocks the highest among all the base metals and thereby is indicating continued decline in stocks. Lead Lead stocks on London Metal Exchange declined by 450 tonnes as against decline of 550 tonnes on the previous day. Lead market continues to remain in backwardation and the spot prices are trading at a premium of $20 tonne.

The calendar spread on MCX has declined and the market has moved into back wardation i.e. far month contract is trading at a discount to the near month. This spread might rise as historically there are very few instances for market moving into back wardation. Nickel Nickel prices was the top performer among all the base metals as it ended with gains of 2.4 percent on MCX. Nickel stocks on London Metal Exchange declined by 360 tonnes as against rise of 1566 tonnes on the previous day. On the fundamental front New Caledonia home of the World s largest nickel deposits was on alert owing to floods in Australia but the company has resumed its operations. Zinc Zinc stocks on London Metal Exchange declined by 100 tonnes as against draw down of 200 tonnes on the previous day. On a weekly basis to stocks rose by 8 750 tonnes on LME and warehouses in China also witnessed increase 5 027 tonnes. Prices rose along with modest decline in open interest indicating short covering along with profit booking at higher levels thereby limiting the gains.