Last week, base metals continued their downward trend, driven by concerns over weak demand in China. The country’s economic growth in the three months leading to June was the slowest in five quarters. The Third Plenum, a significant meeting of Communist Party officials in Beijing, did not meet expectations for addressing structural issues in the economy, particularly the struggling property sector. Aluminium and zinc each fell by 5%, nickel by 3%, lead by 2%, and tin by 9%.
Copper: At the beginning of the week, prices remained supportive as Chinese banks cut their main benchmark lending rate for the first time since August 2023, boosting support for economic growth following the PBOC’s rate reduction. Additionally, the dollar slipped after Joe Biden ended his reelection campaign. Overall, copper prices are expected to face downward pressure due to weak economic indicators and a lack of buying interest. This week, MCX copper prices may find strong support near the Rs. 790/775 level, while Rs. 847/870 may act as strong resistance.
Aluminium: In July, China’s aluminium prices are expected to drop due to weaker restocking demand and reduced operating rates at downstream facilities. In June, aluminium imports rose by 16% to 240,000 mt. LME aluminium inventories increased by 5,500 mt, while SHFE aluminium stocks grew by 3,622 mt, continuing a five-week inflow streak but at a slower pace. Current SHFE aluminium stocks, at 265,822 mt, are the highest since April 2023. This week, MCX Aluminum prices may find strong support near the Rs. 214/210 level, while Rs. 225/239 may act as strong resistance.
Zinc: Zinc prices are likely to remain range-bound following weak economic data from China. Refined zinc production in China increased by 1.5% year-over-year to 590,000 metric tons. With no inventory inflows this week, SHFE stocks declined by 5,838 metric tons to 125,892 metric tons, a notable rise from 56,942 metric tons at this time last year. This week, MCX Zinc prices may find strong support near the Rs. 250/245 level, while Rs. 270/275 may act as strong resistance.
This week, market participants will closely monitor upcoming data releases, including flash PMI from various countries and the US Personal Consumption Expenditure (PCE).
