basemetals intraday

Base Metals
21 May 2008 10:22:59



Major Economic Data:

The U.S. Labor Department said that the producer price index was up .2% in April and up 6.5% from a year ago, less than expected and down from a 6.9% annual gain in March. Excluding food and energy, prices were up .4% in April and up 3.0% from a year ago.

TheChicago Federal Reserve's index of national activity slipped from -.98 to -1.17 in April. Only 21 of the 85 indicators used registered positive growth.

InCanada, wholesale sales totaled C$42.7 billion in March, up .6% on the month and stronger than expected.

Producer prices inGermany were up 1.1% in April, the biggest monthly jump in over two years. The June euro is trading higher.

Copper


Copper fell for a second day on concern that rising inventories are signaling weakening demand fromChina, the world's biggest metals buyer.

Inventories monitored by the London Metal Exchange have gained 11 percent this month, raising concern usage has slowed.

Chinese copper imports last month dropped 19 percent from a year earlier, the nation's customs office said last week. Before today, copper had jumped 24 percent in 2008 partly boosted by concerns that supplies may fall short of consumption.

Judy Zhu, commodity analyst at Standard Chartered Plc inShanghai, said copper and aluminium prices will decline this year as tightening credit policy inChina slows demand growth.

China, the world's largest consumer of all industrialmetals, raised deposit reserve requirements for banks to the highest ever, to cool down inflation and economic growth.

Sterlite Industries (India) Ltd., the nation's largest copper producer, said it will shut its smelter in southernIndia for maintenance work that may last 22 days. The 400,000-ton plant at Tuticorin will close starting May 22.

Codelco, the world's largest copper producer, won't face more protests by contractors' employees over bonus payments, since the workers are getting paid,according to a union spokesman. Workers don't plan any more protests, Claudio Valenzuela, a Santiago-based spokesman for the Confederation of Copper Workers, which organized an earlier strike, said today in a telephone interview.

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 347.9 If market breaches below 347.9 may see prices to take further correction towards 344.7 and 341.8 However if it holds back above 353.9 may see prices to rise further on today. Major resistance is seen at 356.8 and 360.0

Recommendations-MCX Copper June: Sell at 351.50-352.50 Target 346 and 342 SL 354.20

Nickel

MCX Nickel May traded weak following other metals at LME, Nickel registered days low near 1095.5 while slightly covered at closing.

Nickel warehouse stock at LME, net change was -216 MT to 49278 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 1095.0 If market breaches below 1095.0 may see prices to take further correction towards 1085.0 and 1074.5; However if it holds back above 1115.5 may see prices to rise further on today. Major resistance is seen at 1126.0 and 1136.0

Recommendations:MCX Nickel May: Sell at 1108-1110 Target 1095 and 1080 SL 1122



Zinc

Zinc fell for a second consecutive day in London as analysts forecast production losses from China's earthquake will have a limited effect on this year's output.

MCX Zinc May traded towards the low of 94.45 following other metals while market gave a small recovery while closing.

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 today. China, the world's largest producer of the metal, will produce 4.06 million tons in 2008, according to Antaike.

Zinc warehouse stock at LME, net change was –350 MT to 128225 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 94.1 If market breaches below 94.1 may see prices to take further correction towards 92.8 and 91.1; However if it holds back above 97.2 may see prices to rise further on today. Major resistance is seen at 98.9 and 100.2

Recommendations-MCX Zinc May: Sell at 96.20 Target 94.5 and 93 SL 97.40



Lead

Lead fell to the lowest in almost one year on the London Metal Exchange.

The contract for delivery in three months fell as much as $81, or 3.6 percent, to $2,150 a metric ton, the lowest intraday price since May 25, 2007. It traded at $2,155 a ton as of 10:11 a.m. local time.

Lead fell to the lowest in almost a year in London as a 42 percent increase in stockpiles in 2008 suggests supply will move into surplus this quarter, from a deficit previously.

Lead inventories monitored by the London Metal Exchange have swollen to 64,450 metric tons, the highest since Sept. 25, 2006. The market is moving into a surplus of 40,000 tons this quarter, from a shortfall in the first three months, according to Gayle Berry, an analyst at Barclays Capital in London.

Lead, mainly used in car batteries, has lost 16 percent this year, the most among all LME-traded metals. Declining prices will dent sales at producers including Stockholm-based Boliden AB, whose shares have tumbled 8.3 percent this year.

Purchases in China, the largest user, have slowed this year as buyers wait for the government to release rules in June on use of electric bicycles, Berry said. Such batteries account for about 20 percent of the nation's lead usage, Berry said.



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 90.2 If market breaches below 90.2 may see prices to take further correction towards 88.2 and 85.1; However if it holds back above 95.3 may see prices to rise further on today. Major resistance is seen at 98.4 and 100.4

Recommendations –MCX Lead May: Sell at 93.50 Target 91 and 88.5 SL 94.10



Aluminium

MCX Aluminium May traded weak following Lead and Zinc buy market-bounced towards high before closing. Aluminium registered days low near 124.35 while days high near 127.00, Hevay inventory data at LME also supported down prices of the metal.

LME-monitored aluminum stockpiles expanded 22,175 tons, or 2.1 percent, to 1.06 million tons, the LME said today in a daily report. That is the highest since May 28, 2004. All increase took place in Mobile, Alabama. The U.S. is the world's second-largest aluminum producer after China.

Average daily aluminum production rose to 107,100 metric tons last month, the highest since November, as Chinese output rebounded, according to data from the International Aluminium Institute.

China, the world's biggest smelter of the metal, produced 1.1 million tons, a second straight monthly increase, the London-based group backed by metals producers said today on its Web site. Chinese production dropped in January and February after the country suffered the worst snowstorms in decades.

World output totaled 3.213 million tons last month, after 3.218 million tons in March and 3.092 million tons a year ago. African output dropped to 135,000 tons last month, down 5.6 percent from March, and a 7.5 percent decline from a year ago. South Africa, the continent's biggest metal producer, has had a power shortage this year that reduced output at all smelters.

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 126.9 levels. If market breaches 126.9 may see prices to take further upside towards 128.3 and 129.5; however if it holds back below 124.2 may see prices to fall further on today. Major support is seen at 123.0 and 121.6

Recommendations–MCX Aluminium May: Sell at 126.30 Target 125 and 123 SL 127.40

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