Base metals prices on LME rise up to 2.6% d-o-d on China policy easing

Base metals prices on the London Metal Exchange (LME) showcased positive trends, with the sole exception of lead, on Wednesday's closing (24 January, 2024). Zinc, in particular, saw a substantial rise of 2.6%. However, stocks on LME-registered warehouse dropped up to 1.7%, with the highest outflow recorded for lead.

Three-month aluminium futures remained firm at $2,229/tonne (t), nickel prices rose by 2.1% to $16,648/t, copper prices settled at $8,562/t (up 1.8%) and zinc edged up by 2.6% to $2,584/t. In contrast, lead dipped 0.2% to $2,162/t.

Base metals prices remained supported due to a weaker US dollar and Chinese stimulus measures. China's reserve requirement ratio cut and the RMB 2 trillion equity rescue plan boosted confidence.

COMEX market

Copper prices on the Commodity Exchange (COMEX) gained 2.4% to settle at $8,535/t compared to $8,337/t in the previous closing.

India's non-ferrous market

Aluminium

Aluminium ADC12 spot prices remained steady w-o-w at INR 190,000/t ex-Delhi. Tense scrap prices for Delhi are at INR 161,000/t, and Chennai at INR 158,000-159,000/t, excluding GST, with a slight shortage seen in the market, sources informed. Major OEMs reportedly faced a lack of future bookings. However, prices remain unaffected. ADC12 is hovering around INR 188,000-190,000/t exw-Chennai, excluding GST. However, offers are heard at INR 193,000/t.

Copper

Imported copper scrap prices witnessed a mixed trend due to material availability concerns, despite downward trend on LME. US mixed motor scrap was assessed at $1,150-1,170/t, but buyers remained cautious due to the $50-$60/t bid-offer difference. Brass honey prices were quoted at 65%, buyers' bids were 63-63.5%. Middle East brass honey scrap prices went up by $100-$110/t w-o-w. India's domestic copper armature prices remained firm w-o-w.

Global updates

Sluggish Q4 growth in US fuels rate cut expectations

The US economy likely grew at its slowest pace in 1.5 years in Q4, with concerns about inventory and cooling consumer spending. GDP is expected at 2%, reinforcing expectations for Fed rate cuts in H1 2024. Labour market resilience and low layoffs have prevented a recession. Inflation likely moderated to 2.2%, as per secondary sources.

US January PMI signals economic expansion

US business activity strengthened in January and the PMI Output Index rose to 52.3, the highest since June 2023. The rebound in both manufacturing (50.3) and services (52.9) sectors indicates economic expansion. Falling prices suggest easing inflation, supporting expectations of Fed rate cuts in H1 2024.

China's Central Bank initiates reserve rate cuts

China's central bank announced a 50-basis points cut in bank reserves, injecting $140 billion to support the economy and stock markets. Governor Pan Gongsheng hinted at policies to improve commercial property loans, easing concerns about the real estate sector.

Eurozone businesses face contraction

Eurozone businesses faced challenges in January as the Composite PMI, as per secondary sources, edged up to 47.9 from December's 47.6. The eighth consecutive month of below 50 PMI indicates continued contraction, reflecting falling demand and rising price pressures linked to tensions in the Red Sea.

Oil prices gain

Oil prices climbed on Thursday following a larger-than-expected decline in US crude inventories and the Chinese Central Bank's decision to reduce banks' reserve ratio, raising expectations for increased economic stimulus and recovery.

Brent oil futures were marginally up by 0.41% to $80.37 per barrel. Crude oil WTI futures rose by 0.55% to $75.50 per barrel at the time of reporting.

Natural gas prices up

Prices of natural gas were recorded at $2.686/MMBtu, up by 1.7%.

Dollar index

The dollar index, which gauges the value of the greenback in a basket of six different currencies, hovered at 103.33, slightly up by 0.09%.

The rupee was recorded at INR 83.12 against the USD, appreciating marginally against the previous closing.