Weekly Base Metals Market Overview and Outlook

The industrial metal’s price fell from its mid-May record high due to increasing global inventories, sluggish Chinese consumption, and profit-taking by funds. The situation worsened as China’s growth faltered following the Third Plenum’s failure to introduce anticipated stimulus measures. This decline persisted even after the Chinese central bank cut policy loan rates in an effort to stimulate the economy. Copper was down 2%, Aluminium by 3%, Zinc and Lead by 4%.

Meltdown Alert: A big part of the problem for this industrial metal is the weak global manufacturing sector, rising inventories, disappointment over the lack of stimulus, unsatisfactory Chinese growth due to the prolonged property crisis, a US equity market sell-off, and election uncertainty.

Copper: Despite a nearly 20% decline from its record high, copper retains a substantial “hope” premium, driven by market expectations that an ore deficit will transition into a refined metal deficit. The focus will be on China Manufacturing PMI due later this week. This week, MCX Aug Copper prices might find strong support near the Rs. 774/754 level, while Rs. 819/838 may act as strong resistance.

Aluminum: Aluminum prices remains bearish due to growing concerns about global market liquidity and escalating regional conflicts. Additionally, China domestic aluminum supply continues to increase while downstream processing and end-user demand have entered the off-season, leading to a low operating rate in the aluminum processing industry. This week, MCX Aluminum prices might find strong support near the Rs. 207/202 level, while Rs. 217/224   may act as strong resistance.

Zinc: The outlook for the zinc market remains cautious due to concerns over China’s economic performance and the absence of substantial policy measures to stimulate growth. Additionally, zinc inventories in LME warehouses have risen by 9%, reaching their highest level in nearly three months. This week, MCX Zinc prices might find strong support near the Rs. 245/238 level, while Rs. 259/265 may act as strong resistance.

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