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CO : Base Metals Report

Date: Wed, 13 Apr 2011

Except Aluminium, other base metals on London Metal Exchange were trading with marginal loss during Asian session. Nickel and Lead were the major losers in metal complex. While, Aluminium prices were trading upside flat.

LME 3 Month Copper last traded at USD 9796 a tonne. While 3 Months Lead and Nickel on LME last traded at USD 2825 per tonne and USD 27450 per tonne respectively. At LME, 3 Month Aluminium last traded at 2684 USD a tonne. Zinc 3 Month LME contract last traded at 2525 USD per tonne.

Base metals rose last week on fund buying and recovery shown in good import numbers from China. Metal prices may rise further on speculative buying from fund houses.

However, base metals valuations are stretched at present levels and investors are piling up inventories on the hope of expected demand from China in second and third quarter.

Chinese economy is overheating and any further rate hike from China may be a bearish sign for industrial metals and profit booking could drag base metals lower in the short term.

Higher Crude prices are also a concern for industrial metals as higher Crude may bring higher inflationary situation in the world which may trigger sell off in the industrial metals. Crude in international markets last traded near $ 112 per barrel. Any further rise in Crude may bring selling in metal complex.

Base metals are vulnerable for further profit booking and may go down in the short term. Any bounce in metal complex could be a good selling opportunity for positional traders.Copper prices are likely to fall further and may test levels below 9000 USD mark. Nickel prices also likely to correct further and may touch 24500-24000 levels in the short to medium term.

Metals may find its direction from global equity indices and currency movements. Presently almost all the European indices are trading in red which look bearish for metals. Among Asian indices, Nikkei has lost 1.69 percent today and settled at 9555.26 down by 164.44 points.

Investors are eyeing on US trade balance, Import price index and Federal Budget Balance data due tonight in the US Data release.

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