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Base Metals
22 May 2008 10:21:03

Copper Copper fell for the second time in three days as rising inventories of the metal signal slowing demand in China and the U.S., the world's two biggest users.

Inventories monitored by London Metal Exchange have jumped 13 percent this month and today reached the highest level since March 17. China reported this month that its copper imports dropped 19 percent in the first quarter from a year earlier.

The price has dropped 12 percent since reaching a record May 5.The dollar fell as much as 0.5 percent against a weighted basket of the euro, yen and four other major currencies. The gauge has dropped 5.6 percent this year before today, helping to spur a jump in copper prices as traders sought a store of value.

WBMS Report:

The world copper market was in a surplus of less than 4,000 metric tons during the first quarter of 2008, the World Bureau of Metal Statistics said Wednesday. This compares with a deficit of 89,700 tons for the same period of 2007. Copper mine production for the first three months of the year was 3.66 million tons, 4% lower than in January to March 2007. Refined production rose 2.1% to 4.50 million tons.

ICSG Report

The global copper market was in a 60,000 metric ton deficit in February this year, leaving the market in a 60,000-ton deficit for the first two months of 2008, the International Copper Study Group said in a release late Wednesday.

MCX Copper June - 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 348.2 If market breaches below 348.2 may see prices to take further correction towards 346.1 and 344.1 However if it holds back above 352.3 may see prices to rise further on today. Major resistance is seen at 354.3 and 356.4

Recommendations-MCX Copper June: Sell at 351 Target 348, 346 and 344 SL 353.50

Nickel

MCX Nickel May traded very weak following LME movement while LME Inventory data and WBMS report were positive for the market.

WBMS Report: Nickel deficit in Q1 was 9,300 tons, WBMS says

Nickel warehouse stock at LME, net change was -150 MT to 49128 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 1062.0 if market breaches below 1062.0 may see prices to take further correction towards 1044.0 and 1018.0; however if it holds back above 1106.0 may see prices to rise further on today. Major resistance is seen at 1132.0 and 1150.0

Recommendations: MCX Nickel May: Sell at 1085 Target 1060 and 1040 SL 1096

Zinc

Zinc declined on the London Metal Exchange on expectations that output cuts in China after last week's earthquake would have little effect on global supply. MCX Zinc May traded bearish following other metals; market was down by almost 3%.

Production may drop by 60,000 metric tons, or 1.5 percent of this year's estimated output, because of smelter damage, Beijing Antaike Information Development Co. said yesterday. The May 12 quake in Sichuan, China's strongest in 58 years halted some metals production in the region.

Chinese zinc miners in Sichuan province have halted ore production on government orders after the quake, according to researcher CBI China Co. Lead miners in the region are almost certain to have halted too, according to Beijing Antaike Information Development Co. Sichuan, Shaanxi and Gansu together produce around 20 percent of the nation's zinc and lead concentrate, 20 percent of the nation's refined zinc yet very little of the lead metal.

WBMS Report: lead deficit 31,000 tons; zinc surplus 84.500 tons, WBMS says

Zinc warehouse stock at LME, net change was -75 MT to 128150 MT

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 93.0 If market breaches below 93.0 may see prices to take further correction towards 91.7 and 89.9 However if it holds back above 96.1 may see prices to rise further on today. Major resistance is seen at 97.9 and 99.2

Recommendations- MCX Zinc May: Sell at 94 Target 92 and 91 SL 95.20

Lead

MCX Lead May dropped by 2% following other metals at LME, market traded near days low of 90.55, while WBMS report was bullish for prices.

WBMS Report: LEAD DEFICIT 31,000 TONS, ZINC SURPLUS 84.500 TONS, WBMS SAYS

Lead warehouse stock at LME, net change was -600 MT to 63850 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 90.3 If market breaches below 90.3 may see prices to take further correction towards 89.3 and 88.1 However if it holds back above 92.6 may see prices to rise further on today. Major resistance is seen at 93.8 and 94.8

Recommendations –MCX Lead May: Sell at 92.40 Target 90.50 and 89 SL 93.30

Aluminium

MCX Aluminium May traded strong following bullishness at LME despite the fact other metals traded very weak.

WBMS Report

The global Aluminium market was in a 381,000 metric ton surplus in the first quarter of 2008, the World Bureau of Metal Statistics said Wednesday.

This compares with a 116,000 ton surplus in the same period last year. Demand for primary Aluminium was 9.31 million tons, 379,000 tons more than the equivalent total for January to March 2007. Production rose 643,000 tons to 9.69 million tons during the same period, the WBMS said.

Alum warehouse stock at LME, net change was 3900 MT to 1065625 MT

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 129.1 levels. If market breaches 129.1 may see prices to take further upside towards 130.6 and 132.6 however if it holds back below 125.6 may see prices to fall further on today. Major support is seen at 123.6 and 122.1

Recommendations–MCX Aluminium May: Buy at 127.40 Target 128.60 and 130 SL 126.4

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