basemetals intraday

Basemetals
29 May 2008 10:11:40



Base Metals May 29, 2008

Major Economic Data:


The U.S. Commerce Department said that durable goods orders were down .5% in April, better than expected. Excluding transportation, orders were up 2.5%, also better than expected.


The Mortgage Bankers' Association said that its index of mortgage applications was down 4.6% last week.
Real GDP in Malaysia was up 7.1% in the first quarter from a year ago, stronger than expected. Malaysia is the third largest economy in Southeast Asia.

Copper


Copper dropped to a two-month low in London as rising inventories signalled slower demand. MCX Copper June dropped towards the low of 342.40 and bounced back to 347.80

Metals bearish movement was supported by weakness oil and bullion prices as Crude oil fell in New York as prices around $130 a barrel may lead consumers in the U.S. and Asia to limit fuel purchases. Gold fell in New York, heading for the biggest two-day drop in three weeks, as crude oil extended its losses for a second straight day, reducing demand for the precious metal an inflation hedge. Silver also dropped.

Copper stockpiles in warehouses monitored by the London Metal Exchange climbed 1,400 metric tons to 125,800 tons, the highest since March 13, according to the exchange's daily warehouse report.

Metal orders may drop ahead of the northern hemisphere summer when manufacturing slows, said Alex Heath, head of base-metals trading at RBC Capital Markets in London.

MCX Copper June - Technical Outlook:

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 EMA. The downside closing price reversal on the daily chart is somewhat negative.

Market is expected to remain positive and the resistance is seen at 351.4 levels. If market breaches 351.4 may see prices to take further upside towards 354.9 and 359.4 however if it holds back below 343.3 may see prices to fall further on today. Major support is seen at 338.8 and 335.3

Recommendations-MCX Copper June: Buy at 346 Target 349 and 352 SL 344.10

Nickel

Nickel fell for a second day in Asia on a weaker outlook for demand from the stainless steel industry, which accounts for two-thirds of total nickel use. Copper fell.

Stainless steel output has been picking up more slowly than anticipated, according to Michael Widmer, director of metals research at Lehman Brothers Holdings Inc. Nickel inventories in London Metal Exchange warehouses stood at 48,558 metric tons yesterday, nearly 7 times the level a year ago.

The price of nickel, which has halved in the past year, may rebound as China shuts furnaces producing the substitute nickel pig iron, a Chinese smelter said.

China last August issued orders restricting investment in nickel pig iron furnaces and demanded the closure of furnaces with a capacity of less than 300 cubic meters to curb energy consumption. Nickel is used in the making of stainless steel.

Nickel pig iron, processed from low-grade nickel ore, contains 4 to 10 percent nickel. The price of nickel has plunged because of the use of substitute and as stainless steel producers ran down inventories rather than buy new stocks.

Jinchuan Group Co., Asia's biggest nickel producer, lowered prices on May 22 after mills reduced usage. The raw material has been in a surplus for 13 months through March, according to the International Nickel Study Group.

China's nickel demand, including refined metal and nickel-ore content, may jump 20 percent this year on increased stainless-steel production, an analyst at Xinhua News Agency's specialist metals publication said.

Nickel consumption may rise from 335,000 metric tons last year, Chong Dahai of the fortnightly China Metals report said in an interview at a conference in Shanghai. Imports of the refined metal may outpace ore because of falling prices on the London Metal Exchange, the stronger yuan and the government's crackdown on small furnaces making nickel pig iron, he said.

Nickel warehouse stock at LME, net change was –54 MT to 48504 MT

MCX Nickel May - Technical Outlook:

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 EMA. The upside closing price reversal on the daily chart is somewhat positive.

Market is expected to remain negative and the support is seen at 948 If market breaches below 948 may see prices to take further correction towards 928 and 906 However if it holds back above 989 may see prices to rise further on today. Major resistance is seen at 1011 and 1031

Recommendations: MCX Nickel May: Sell at 970-975 Target 955 and 940 SL 986

Zinc

MCX Zinc May dropped towards the low of 88.35 following heave inventory data at LME and move was supported by weakness in copper and bullion-energy prices.

Zinc stocks in warehouses monitored by the London Metal Exchange rose the most since Jan. 7. Inventories climbed 7,000 metric tons, or 5.4 percent, to 135,650 tons, the highest since October 2006, according to exchange figures.

MCX Zinc May - Technical Outlook:

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 EMA. The upside closing price reversal on the daily chart is somewhat positive.

Market is expected to remain negative and the support is seen at 88.4 If market breaches below 88.4 may see prices to take further correction towards 86.8 and 85.3 However if it holds back above 91.6 may see prices to rise further on today. Major resistance is seen at 93.1 and 94.7

Recommendations- MCX Zinc May: Sell at 91 Target 88 and 86 SL 92.30

Lead

Lead fell to a one-year low on the London Metal Exchange. The metal for delivery in three months fell to $1,980 a metric ton, the lowest since May 17, 2007, and was at $2,000 a ton as of 1:21 p.m. local time. Prices have dropped 22 percent this year.

Lead warehouse stock at LME, net change was -25 MT to 63575 MT

MCX Lead May -Technical outlook:

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 EMA. The upside closing price reversal on the daily chart is somewhat positive.

Market is expected to remain negative and the support is seen at 85.9 If market breaches below 85.9 may see prices to take further correction towards 84.3 and 83.1 However if it holds back above 88.6 may see prices to rise further on today. Major resistance is seen at 89.8 and 91.4

Recommendations –MCX Lead May: Sell at 88 Target 86 and 84 SL at 89.20

Aluminium

Alum warehouse stock at LME, net change was 1225 MT to 1072300 MT

Saudi Arabian Mining Co., the state- owned metals and minerals producer known as Ma'aden, said its aluminum project with Rio Tinto Group will be delayed to 2012 due to the lack of power supply.

Workers at CVG Industria Venezolana de Aluminio CA, Venezuela's biggest state-owned aluminium smelter, went on strike after bonuses were withheld, Correo del Caroni said. The strike began at 9:30 a.m. local time yesterday after the company sent a letter saying it wouldn't make payments, the Venezuelan newspaper said.

MCX Aluminium May -Technical outlook:

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 EMA. The downside closing price reversal on the daily chart is somewhat negative.

Market is expected to remain positive and the resistance is seen at 126.8 levels. If market breaches 126.8 may see prices to take further upside towards 129.0 and 131.0 However if it holds back below 122.6 may see prices to fall further on today. Major support is seen at 120.6 and 118.4

Recommendations–MCX Aluminium May: Buy at 124 Target 126 and 128 SL 122.90

MCXARUN
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