basemetals intraday

Basemetals
04 June 2008 09:58:30



Base Metals June 04, 2008

Major Economic Data:
Federal Reserve Chairman Bernanke told an international monetary conference in Spain that further rate cuts were not likely because of rising inflation. He expects the U.S. economy to improve in the second half of 2008 and into 2009.

The U.S. Commerce Department said that factory orders were up 1.1% in April, much stronger than expected. Factory orders for March were also revised higher, from a 1.3% to a 1.5% gain. Durable goods orders, however, were down .6% in April.

It's a tough time for the auto industry. U.S. vehicle sales in May were down 16% for Ford; 28% for General Motors; and 25% for Chryseler. Also, General Motors announced that they are closing four truck and SUV plants.
Eurostat said that real GDP in the Euro area 15 was up .8% in the first quarter and up 2.2% from a year ago, up slightly from an earlier estimate. Also, an index of industrial producer prices was up 6.1% in April from a year ago, the most in seven years.
The Reserve Bank of Australia kept its interest rate unchanged at 7.25%, as expected.

Copper

Copper fell for a third day in Asia on concern global demand may be waning and as gains by the U.S. dollar reduced investor demand for commodities. Shanghai copper dropped to a four-month low.

The metal fell yesterday after U.S. Federal Reserve Chairman Ben S. Bernanke warned commodity prices will ``level out'' as the slowing global economy reduces demand for raw materials. The dollar rose to a two-week high against the euro after Bernanke signaled the Fed is done cutting U.S. interest rates for now.

Gross domestic product in China, the fastest-growing major economy, expanded 11.9 percent last year and 10.6 percent in the first quarter of 2008.

Manufacturing growth in China eased in May, the CLSA China Purchasing Managers' Index showed on June 2. The gauge declined to a seasonally adjusted 54.7 last month from 55.4 in April, raising concern that the country's copper consumption for appliances and other goods may slow and lead to lower prices.

China's refined copper imports, the world's biggest, may have topped 100,000 metric tons in May for a seventh straight month even as high prices deterred buying and the economy showed signs of slowing.

Copper prices in London have rallied 18 percent this year, as demand from China and supply disruptions helped to shrink global stockpiles by more than a third. China's manufacturing growth slowed last month, raising concern that use of the metal for wires and pipes may decline.

China imported 127,977 tons of refined copper in April, up from 126,421 tons in March, according to revised data issued by the Beijing-based customs office on May 22. Preliminary trade data for May are scheduled for release early next week.

Global stockpiles of copper tracked by the LME dropped 38 percent this year to 122,900 tons as of yesterday, while Shanghai inventories climbed 85 percent to stand at 44,554 tons last week.

Mexico's biggest mining union may vote this week on whether to hold more strikes if the Labor Ministry doesn't officially recognize its leader's re-election.

Ivanhoe Mines Ltd., the developer of the Oyu Tolgoi copper and gold mine in Mongolia, is still talking with the government to secure an investment agreement, the company's founder said.

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 333.1 If market breaches below 333.1 may see prices to take further correction towards 331.6 and 329.1 However if it holds back above 337.1 may see prices to rise further on today. Major resistance is seen at 339.6 and 341.1

Recommendations-MCX Copper June: Sell at 335.50 Target 333 and 331 SL 337.80

Nickel

MCX Nickel June dropped towards the low of 937 yesterday following weakness in red metal, market closed at 951.50 with minor gains. Before it market rose towards the high of 970 following

BHP Billiton Ltd., the world's largest mining company, says the Nickel West unit and Mt. Newman iron ore project in Western Australia are producing as normal after an explosion at Apache Corp.'s plant yesterday threatened the natural gas supply.

OAO GMK Norilsk Nickel, the biggest producer of the metal, faces a weakening profit outlook as falling nickel prices add to concerns about a battle over control of the company, UralSib Financial Corp. said.

Toledo Mining Corp., the owner of nickel mines in the Philippines, said construction of a road at its Berong project may double capacity to 2 million metric tons of ore.

Nickel warehouse stock at LME, net change was -54 MT to 47940 MT

MCX Nickel 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 936 If market breaches below 936 may see prices to take further correction towards 920 and 903 However if it holds back above 969 may see prices to rise further on today. Major resistance is seen at 986 and 1002


Recommendations: MCX Nickel June: Sell at 965 Target 945 and 930 SL 978

Zinc

MCX Zinc dropped yesterday following LME movement and LME; market was supported by decline in copper prices. Before it market rose towards the high of 85.45 and dropped to 82.30

Zinc warehouse stock at LME, net change was -500 MT to 144350 MT

MCX Zinc 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 81.7 If market breaches below 81.7 may see prices to take further correction towards 80.4 and 78.6 However if it holds back above 84.9 may see prices to rise further on today. Major resistance is seen at 86.7 and 88.0



Recommendations- MCX Zinc June: Sell at 84.20 Target 82 and 81 SL 85.20

Lead

MCX Lead June traded strong as market was expecting a short covering from recent decline in prices. Market traded toward the high of 88.90, before it market dropped to low of 85.20 and closed at 87.90 with 2.73% gain.

Lead warehouse stock at LME, net change was 1300 MT to 68600 MT

MCX Lead 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 89.5 levels. If market breaches 85.2 may see prices to take further upside towards 91.0 and 93.2 However if it holds back below 85.8 may see prices to fall further on today. Major support is seen at 83.6 and 82.1

Recommendations –MCX Lead June: Buy at 86.50 Target 89 and 91 SL 84.80

Aluminium

Record energy prices and power failures from China to South Africa are leading to mounting concerns that aluminum supplies will be curtailed within five years as production costs increase, futures prices show. Aluminum for delivery in 2013 rose 5 percent in May on the London Metal Exchange, the most in three months. The $147 increase in the contacts to $3,110 a metric ton contrasts with a 0.9 percent gain in the cash market for immediate delivery.

Deutsche Bank AG raised its aluminum forecasts on March 28 from this year through 2012 by between 8 percent and 13 percent after oil surpassed $100 a barrel. Snowstorms and last month's earthquake curbed output in China, and South African power shortages delayed the start of a new smelter.

Energy accounts for about 40 percent of the cost of aluminium smelting, compared with 30 percent last year, according to Barclays Capital. Supply will expand at 4.5 percent this year, compared with 12 percent in 2007, according to a May 12 forecast by Citigroup Inc.

Aluminum demand is expanding 6 percent annually, so delays increase concern about supply through 2010, Barclays said. Six new smelters need to be built each year to meet demand, based on the average plant being able to produce 500,000 tons annually.

Aluminum Corp. of China Ltd., the country's largest producer of the metal, cut alumina prices by 16.7 percent to 3,500 yuan ($505) a metric ton effective from today.

Alum warehouse stock at LME, net change was -875 MT to 1074900 MT

MCX Aluminium 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 124.0 levels. If market breaches 124.0 may see prices to take further upside towards 124.7 and 125.3 However if it holds back below 122.7 may see prices to fall further on today. Major support is seen at 122.1 and 121.4


Recommendations–MCX Aluminium June: Buy at 123 Target 124.50 and 126 SL at 121.80

MCXARUN
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