Mixed trend in base metals

In a volatile session, base metal prices ended mixed but largely with positive bias. Aluminum, zinc and copper prices ended higher while nickel and lead prices ended lower.

US GDP growth in the Q1 came in largely unchanged at 1.8% as against expectation of more than 2%. Initial jobless claims also declined. This pressured on dollar as it ended lower by half a percent. US equity markets ended largely flat but with positive bias. IT index NASDAQ however ended strongly with gains of 0.7%.

Asian equity markets are largely trading higher with the exception of Japanese market which is trading lower after some disappointing corporate earnings. Dollar index continues to remain under pressure and is currently trading lower by half a percent close to 75.3 levels.

In the morning session on LME, base metal prices are trading higher with average gains of half a percent. On the economic data front, euro zone economic confidence is expected to decline along with largely unchanged business climate indicator.

From US, both the personal income and spending are expected to grow though at a modest pace. Michigan confidence numbers are expected to remain unchanged while pending home sales might decline. Overall, base metal prices are expected to remain on the higher side however stronger rupee along with decline in pending home sales might lead to paring some of the gains in the later hours.

Aluminum

Aluminum stocks on London Metal Exchange witnessed draw downs of 575 tonnes as against decline of 450 tonnes on the previous day. On the fundamental front, Western world unwrought aluminum stocks fell to 1.514 million tonnes in April as against 1.550 million tonnes in the previous month. Cancelled warrant ratio continues to remain higher indicating that stocks might continue to witness draw downs in the near term.

Copper

Copper stocks on London Metal Exchange witnessed draw downs of 1,150 tonnes as against build up of 125 tonnes on the previous day. Cancelled warrant ratio has also moved higher on London Metal Exchange but over a period of time, it has been quite volatile and thereby is giving no clear indication of future price movement. Basis on LME has also declined from close to USD 20 per tonne to USD 7 per tonne indicating that cash prices are rising faster than the forwards indicating pick up in demand.

Lead

Lead prices declined by more than a percent on LME while in Indian markets prices ended lower by half a percent. Lead stocks on London Metal Exchange witnessed draw-downs of 25 tonnes as against build up of 825 tonnes on the previous day. For the whole week however stocks are headed for net build-up on London Metal Exchange thereby would be marking seventh consecutive week of increase in stocks.

Nickel

Nickel prices ended lower with losses of around 2% on both LME and MCX thereby underperforming the entire base metal pack. Nickel stocks on London Metal Exchange witnessed decline of 222 tonnes as against draw-downs of 156 tonnes on the previous day. Basis has been quite volatile moving from anywhere between USD 20 per tonne tonne to USD 0 per tonne thereby giving no clear indication about the prices direction for the near term.

Zinc

Zinc prices ended higher with gains of nearly half a percent on LME while prices gained by nearly a percent on MCX. Zinc stocks on London Metal Exchange witnessed draw-downs of 325 tonnes as against build up of 2,725 tonnes on the previous day. The lead and zinc spread has moved lower to 12.5 levels on the back of outperformance of zinc and the spread has further potential to decline in the near term.