basemetals intraday

Base Metals April 25, 2008



Major Economic Data:

The U.S. Labor Department said that job claims were down 33,000 last week to 342,000, less than expected and the lowest in tow months.

The U.S. Commerce Department said that durable goods orders were down .3% in March, the third consecutive monthly decline. Excluding transportation, orders were up 1.5% on the month, stronger than expected.

The U.S. Census Bureau said that new home sales were at an annual rate of 526,000 in March, down 8.5% from February's pace and down 36.6% from a year ago. New homes for sale represent an 11-month supply.

Copper


MCX Copper April traded in tight range of 341 –348 following overseas market, as marketis over all mixed despite the bearish news of China demand and bullish news of mine strike.

Codelco news still in focus, reopening of El Teniente doesn't mean complete solution to contract workers' strike, Andina, El Salvador divisions still closed.

Copper prices balanced between supportive influence of output losses in Chile, potentially bearish influence of weaker Chinese demand.

Problems playing out against backdrop of general intensification of supply issues in mining, latest evidence from BHP Billiton production report, showing 8% Q1 drop in copper output mostly because of lower grades, recoveries at Escondida in Chile.

LME copper bouncing on either side of $8,500/ton on strike, currency factors. Prices needs to close above $8,800 or below $8,200 to confirm fresh direction. MCX Copper June range is 354 to 329 Current Market Price : 344.30

Data released by the General Administration of Customs this week show that China's imports of refined copper in March fell 38% on the year to 126,421 metric tons. Total imports in the first quarter fell 19% on the year to 390,735 tons.

China's declining imports of copper indicate that the voracious appetite of the world's largest consumer may be waning as London Metal Exchange prices hold at near-record highs.

Copper warehouse stock at LME, net change was –275 MT to 112200 MT

China copper market is seen softening short term due to an inventories build in 1Q as LME/Shanghai arbitrage favours imports, Sees consumption growth slowing to 12% from 18%, around 535,000 tons.

MCX Copper April - 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 347.3 levels. If market breaches 347.3 may see prices to take further upside towards 350.7 and 353.4, however if it holds back below 341.2 may see prices to fall further on today. Major support is seen at 338.5 and 335.1




Recommendations -MCX Copper April: Sell at 345-346 Target 341 and 339 Stop loss 348.50





Nickel



Nickel traded positive for the day following bullish news from International Nickel Study Groups. INSG says that World primary nickel consumption is estimated to grow by 13% in 2008 to reach 1.47 million tons, up from 1.33 million tons in 2007. MCX Nickel April traded above 1150 was up almost by 1% despite other base metals remains negative.



World primary nickel consumption is expected to reach a record high in 2008 due to a recovery in nickel-containing stainless steel production around the world, particularly in China, the International Nickel Study Group said Thursday.



However, at the same time production is forecast to grow outstripping demand by 70,000 metric tons, according to data from the INSG.



World primary nickel consumption is estimated to grow by 13% in 2008 to reach 1.47 million tons, up from 1.33 million tons in 2007. Primary nickel consumption declined in 2007 on the year from 1.4 million tons in 2006, INSG said.



World primary refined nickel production is forecast to increase by 6.9% in 2008 to 1.54 million tons. INSG said primary refined nickel production was 1.44 million tons in 2007, which was up from 1.35 million tons in 2006. The 2008 figure does not include any adjustment factor for possible production disruptions, INSG said.



Prices of nickel traded on the London Metal Exchange have fallen as much as 52% since the record high of $51,800 a ton in May 2007 due partly to a slowdown in stainless steel consumption and the development of a substitute called nickel pig iron in China. Stainless steel is the biggest consumer market for nickel.



Nickel warehouse stock at LME, net change was –288 MT to 51978 MT



MCX Nickel April - 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 1163.0 levels. If market breaches 1163.0 may see prices to take further upside towards 1170.0 and 1180.0, however if it holds back below 1146.0 may see prices to fall further on today. Major support is seen at 1136.0 and 1129.0






Recommendations: MCX Nickel April: Sell at 1160-1157 Target 1138 and 1130 Stop loss 1171







Zinc



MCX Zinc April traded mixed on Thursday, market maintained a tight range of 89.95 to 88.35.



The global zinc market is seen in 215,000 metric ton surplus in 2008, the International Lead and Zinc Study Group said Thursday.



Global zinc demand is seen rising to 11.85 million tons in 2008, mainly due to growth in Asia, while world output of refined zinc metal is forecast to rise by 6.4% to 12.06 million tons, the ILZSG said.



Chinese demand is forecast to rise by 10.4% primarily as a consequence of further investment in domestic infrastructure. Demand is also expected to increase in India, Japan, South Korea and Thailand, according to the ILZSG.



Refined production in India will get a boost from Hindustan Zinc's second 170,000-ton-a-year refinery that was commissioned in December 2007. Production increases are forecast in a number of other countries including Canada, Iran, Japan, South Korea, Mexico, Peru and the U.S., ILZSG said. World output of refined zinc metal is forecast to rise by 6.4% to 12.06 million tons, with further significant increases expected in China and India.



Meanwhile global zinc mine production is expected to increase by 10.4% to 12.08 million tons according to the ILZSG, driven by Bolivian output after last year's opening of Apex Silver's San Cristobal mine.



Chinese net exports of refined zinc metal this year are expected to be significantly lower than in 2007 mainly as a result of rising domestic demand.However, net imports of zinc contained in zinc concentrates in 2008 are forecast to remain close to the record levels achieved in 2007, the ILZSG said.



Zinc warehouse stock at LME, net change was –650 MT to 128975 MT



MCX Zinc April - 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 88.3 If market breaches below 88.3 may see prices to take further correction towards 87.5 and 86.7, However if it holds back above 89.9 may see prices to rise further on today. Major resistance is seen at 90.7 and 91.5



Recommendations-MCX Zinc April: Sell at 89.00–89.50 Target 87.50 and 86.70 Stop loss 89.95







Lead



MCX Lead traded weak following other metals as ILZSG said that Global lead mine production is forecast to increase by 8.4% to 3.91 million tons in 2008. Heave stock in at LME warehouse also supported the movement.



The world market for refined lead is expected to be in a surplus of 26,000 metric tons during 2008 with both global demand for and production of refined lead forecast to increase, the International Lead and Zinc Study Group said Thursday.



Global lead mine production is forecast to increase by 8.4% to 3.91 million tons in 2008. Global refined lead production is predicted to increase by 4.3% to 8.6 million tons in 2008. And global lead demand is forecast to rise by 3.9% to 8.57 million tons, the ILZSG said.



Demand in Europe for refined lead metal will decline by 2% in 2008 and remain roughly unchanged on the year in the U.S., the ILZSG said.



However, demand growth of 12.7% is forecast in China, and this, combined with expected increases in demand in India, Japan and South Korea, will drive an overall global increase in demand, it said.



European mine output should rise following the recent reopening of mines in Macedonia and Portugal. Output increases are also forecast in Australia, Bolivia, Canada, China, Iran, Mexico, Peru and the U.S.



Global refined lead production is predicted to increase in 2008 driven primarily by further increases in China.



Less favorable tax incentives combined with higher domestic demand are expected to continue to restrict the quantity of refined lead shipped out of China and it is anticipated that the volume of net exports will be 11% lower than in 2007.



Lead warehouse stock at LME, net change was 1100 MT to 54750 MT



MCX Lead April -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 109.7 If market breaches below 109.7 may see prices to take further correction towards 108.7 and 107.3, However if it holds back above 112.2 may see prices to rise further on today. Major resistance is seen at 113.6 and 114.6





Recommendations –MCX Lead April: Sell at 111- 110.80 Target 109 and 107.50 Stop loss 112.30

Aluminium



MCX Aluminium April traded weak following other metals counter, a strong dollar and weak metals prices supported the movement, while heavy inventory in at LME dropped metal heavily.



Dollar remains generally firm in early US session despite mixed data. On the positive side, jobless claims unexpected fell to a two month low of 342k. Even though headline durable goods orders dropped for the third consecutive by -0.3% in March, the details were indeed solid.



Ex-transport orders rose strongly by 1.5% while ex-defence orders also climbed 0.3%. However, deterioration in the housing market is still clearly seen in another month of disappointing new home sales which dropped sharply by -8.5% to 526k annualised rate in March.



Alum warehouse stock at LME, net change was 11900 MT to 1038850 MT



MCX Aluminium April -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 121.4 levels. If market breaches 121.4 may see prices to take further upside towards 123.4 and 124.3, however if it holds back below 118.5 may see prices to fall further on today. Major support is seen at 117.6 and 115.6





Recommendations–MCX Aluminium April: Buy at 118.50 Target 120 and 122 Stop loss at 117.50


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