LME base metals face pressure amid dollar strength; Zinc stocks rise by over 4%

Base metals prices on the London Metal Exchange (LME) were under pressure barring nickel as of yesterday's closing. Three-month prices on LME dropped by up to 1% with the highest drop recorded in copper. Meanwhile, stocks at LME registered warehouses witnessed inflows by over 4% barring nickel and copper.

Three-month aluminium futures rose by 0.8% to $2,230/tonne (t), nickel prices were at $15,925/t (down 0.5%), copper prices settled at $8,402/t (up 0.5%), zinc edged up by 0.5% to $2,432/t and lead prices were largely stable at $2,114/t.

Notably, zinc stocks at LME registered warehouses witnessed an increase in inflow by over 4% to 206,450 t.

COMEX market

Copper prices on the Commodity Exchange (COMEX) dipped by 1.3% to settle at $8,205/t compared to $8,315/t in the previous closing.

India's non-ferrous market

Aluminium

Rising aluminium ADC12 prices are driven by shortages in raw materials like tense scrap, exacerbated by supply chain disruptions and geopolitical issues. Manufacturers were securing future orders amidst the scarcity. Despite some relief in imported scrap prices, market pressures persisted, with aluminium futures reflecting a slight decline.

In the domestic market, the scarcity of raw materials, especially tense scrap, has led to higher prices. Tense scrap is priced at INR 166,000/t.

Copper

India witnessed a 2.6% decline in imported copper prices due to a drop in LME future prices. BigMint priced mix motor scrap from the US at $1,140/t and brass honey scrap from the Middle East at $5,415/t, CFR Mundra. Despite lower prices, buyers hesitated, further keeping bids $50-$60/t lower. The domestic market in India remained mostly unchanged for the day.

Global updates

China CPI, PPI drop in January

China's consumer prices experienced their sharpest decline in over 14 years in January, with the CPI falling 0.8% y-o-y. Producer prices also dropped, indicating entrenched deflationary pressures, urging policymakers to take aggressive action to revive confidence and demand.

German industrial output continues decline

German industrial production fell more than expected in December, marking the seventh consecutive monthly decline. Weakness persisted in energy-intensive industries, with notable declines in chemicals and construction. Despite a 4.0% increase in automotive production, overall output remained subdued, raising concerns of GDP's downward revision.

India maintains key rate amid inflation

India's key rate remained unchanged at 6.50% for a sixth consecutive meeting as inflation persisted above the 4% target. The monetary policy stance emphasizes 'withdrawal of accommodation,' aiming to maintain restrictive measures despite resilient economic growth.

Vedanta aims to raise $1.3 billion for Konkola copper mines

Vedanta Base Metals CEO, revealed plans to raise $1.3 billion for restarting Konkola Copper Mines in Zambia, potentially involving a minority stake sale. Vedanta will retain majority ownership. Zambia agreed to return control in September 2023. Operations ceased after Zambia's 2019 seizure, but Vedanta aims to increase copper output to 200,000 t.

China's January copper cathode output down

As per secondary sources, in January, China's copper cathode output decreased by 2.96% m-o-m to 969,800 t due to various factors including fewer working days and maintenance activities. However, it surpassed expectations by 16,200 t. February's production is expected to decline to 959,400 t, with maintenance plans and lower operating rates during the Chinese New Year holidays affecting output.

China's January silicon prices decline amid reduced demand

In January, silicon prices declined due to decreased downstream demand and falling futures contract values. Spot prices for various silicon grades dropped, with transactions muted in early February amid the Chinese New Year. Inventory pressure may limit price hikes despite potential stockpiling later on, as per secondary sources.

Oil prices inch up

Oil extended gain today after Israel rejected a ceasefire offer from Hamas, while a weaker dollar also supported prices.

Brent oil futures were marginally up by 0.28% to $79.43 per barrel. Crude oil WTI futures were up by 0.27% to $74.06 per barrel at the time of reporting.

Natural gas prices dip

Prices of natural gas were recorded at $1.962/MMBtu, down by 0.25%.

Dollar index

The dollar index, which gauges value of the greenback in a basket of six different currencies, hovered at 104.03, slightly down by 0.03%.

The rupee was recorded at INR 82.98 against the USD, depreciating marginally against the previous closing.