Base metals intraday

Copper and nickel slid for a second day in London on concern that the U.S., the world's second- largest user of industrial metals, is sliding into recession. Lead and zinc also declined.

· US December industrial production avoided the outright decline economists had been expecting, but the slowing economy left fourth quarter production at a -1.0 pct annualized rate, the first quarterly drop since a -1.5 pct rate in Q4 of 2006.

· The Federal Reserve reported the output of US factories, mines and utilities was unchanged last month vs a forecast 0.2 pct fall. That followed an unrevised and unexpectedly large 0.3 pct gain in November. October production fell 0.5 pct. Compared with December of last year,US industrial production was up 1.5 pct.

· December's operating rate was 81.4 pct of capacity, off slightly from the revised 81.6 pct in November, but again a sign that production wasn't contracting quite as rapidly as feared. The median forecast for capacity utilization was 81.2 pct.

· Manufacturing was supposed to be the weak point in the December industrial production report, based on a decline in hours worked and slowdowns at auto plants. Instead, overall manufacturing also held unchanged with with a 0.2 pct increase in automotive products.

· Demand for all metals in China, the world's largest user, continued to expand last year and support prices. Nickel consumption increased 30 percent in the first 11 months, the International Nickel Study Group said yesterday.

· Imports of refined copper and alloys gained 78 percent in the full year, the Beijing-based customs office said.



· Copper and nickel slid for a second day in London on concern that the U.S., the world's second- largest user of industrial metals, is sliding into recession. Lead and zinc also declined.

· US December industrial production avoided the outright decline economists had been expecting, but the slowing economy left fourth quarter production at a -1.0 pct annualized rate, the first quarterly drop since a -1.5 pct rate in Q4 of 2006.

· The Federal Reserve reported the output of US factories, mines and utilities was unchanged last month vs a forecast 0.2 pct fall. That followed an unrevised and unexpectedly large 0.3 pct gain in November. October production fell 0.5 pct. Compared with December of last year,US industrial production was up 1.5 pct.

· December's operating rate was 81.4 pct of capacity, off slightly from the revised 81.6 pct in November, but again a sign that production wasn't contracting quite as rapidly as feared. The median forecast for capacity utilization was 81.2 pct.

· Manufacturing was supposed to be the weak point in the December industrial production report, based on a decline in hours worked and slowdowns at auto plants. Instead, overall manufacturing also held unchanged with with a 0.2 pct increase in automotive products.

· Demand for all metals in China, the world's largest user, continued to expand last year and support prices. Nickel consumption increased 30 percent in the first 11 months, the International Nickel Study Group said yesterday.

· Imports of refined copper and alloys gained 78 percent in the full year, the Beijing-based customs office said.

Technical Outlook:

Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Copper Feb: Sell at 280-279 for the target of 272, 270 and 268 with stop loss at 283.25



MCX Zinc Jan (Daily Chart)



Technical Outlook:

Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Zinc Jan: Sell at 91.00-91.50 for the target of 89.20 and 88.50 with stop loss at 92.40

MCX Nickel Jan (Daily Chart)



Technical Outlook:

Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Nickel Jan: Sell at 1110-1105 for the target of 1080 and 1065 with stop loss at 1135

MCX Lead Dec (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Lead Jan: Sell at 102.50-102 for the target of 101.20 and 100.50 with stop loss at 103.20

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