Base metals prices, stocks on LME witness contrasting trends

Base metals prices on the London Metal Exchange (LME) displayed mixed trends on Friday's closing (26 January, 2024). However, stocks on LME-registered warehouse majorly dropped by up to 2.46% barring lead which reported an inflow of 1% to 110,675 t.

Three-month aluminium futures rose by 1.9% to $2,274/tonne (t), nickel prices rose by 1% to $16,790/t, copper prices settled at $8,547/t (down 0.3%), zinc edged down by 0.2% to $2,590/t and lead dipped 0.6% to $2,144/t.

In the Asian markets this week, investors are watching for signals on the enduring optimism towards China and contemplating the Federal Reserve's position. Notable events comprise the Fed decision, Chair Jerome Powell's briefing, and the unveiling of Chinese PMI data. Optimistic indicators from China and a strong global mood are uplifting regional markets, potentially influencing the global base metals market.

COMEX market

Copper prices on the Commodity Exchange (COMEX) dipped 0.3% to settle at $8,469/t compared to $8,492/t in the previous closing.

Weekly update: India's non-ferrous market

In the Indian non-ferrous metals sector, prices predominantly remained elevated during the week, aligning with the global trend. According to BigMint's evaluation, both imported and domestic aluminium market prices experienced minor fluctuations. However, copper, zinc, and lead prices saw increases during this period.

Market trade activities maintained a moderate pace for the week, though concerns persisted about the increasing freight rates.

Global updates

Red Sea disruptions threaten global manufacturing

Prolonged disruptions at the Red Sea trade route pose a threat to manufacturing in sectors such as electronics, automobiles, chemicals, and consumer goods, warned economic think tank GTRI. Industries relying on just-in-time processes with low inventory levels may face vulnerability. Global value chains, including those in electronics, automotive, machinery, chemicals, pharmaceuticals, plastics, textiles, and consumer goods, could experience production setbacks and increased costs due to disruptions in shipping through the Suez Canal.

Marginal December price increase in the U.S. spurs rate cut expectations

U.S. prices in December showed a marginal increase, maintaining annual inflation below 3% for a third consecutive month. This strengthened expectations of a Federal Reserve interest rate cut in 2024, although the timing remained uncertain. Consumer spending surged at the end of 2023, prompting caution despite improving inflation trajectories.

New Madrid smelter closure: U.S. aluminum industry challenges

The New Madrid smelter's closure in Missouri reduced U.S. primary aluminum producers to four, reflecting the sector's decline amid high power costs and Chinese exports. Efforts, including Trump's tariffs and Biden's spending, failed to revive the industry. Despite import dependency concerns, changing trade dynamics and a growing emphasis on recycling may render the preservation of aging smelters less critical for the U.S. aluminum industry's future, as per secondary sources.

Chinese firms to invest $7 billion in Congo's Sicomines venture

Chinese construction firms will invest up to $7 billion in infrastructure projects as part of the Sicomines copper and cobalt joint venture in the Democratic Republic of Congo. The agreement maintained the current shareholding structure, and Chinese partners will pay 1.2% of royalties annually to Congo.