Metals traded within a tight range due to low volumes, with investors becoming cautious ahead of the quarter-end close. Additionally, traders were wary ahead of the Chinese manufacturing PMI data release, which is particularly significant given the recent signs of weakness in the Chinese local markets. Overall, metals ended the month in negative territory. (Copper fell by 1%, Zinc rose by 4%, while Aluminium and Lead gained 1%).
Copper: Copper suggests continued consolidation at lower levels with volatility expected this week, driven by disappointing Chinese PMI and industrial data, increasing inventories, an overvalued US equity market, and persistent US inflationary pressures. Mid-year settlements by companies are also influencing activity in the spot market. According to the ICSG, the global refined copper market reported a surplus of 13,000 metric tons in April, marking a decrease from March’s surplus of 123,000 metric tons.
Several key events could impact the market: global PMI data due later today, option expiry on Wednesday, and US non-farm payroll data on Friday. These events could significantly influence the metals market.
Sell Copper MCX JUL at 840 with a stop loss at 850 and a target of 827.
Aluminum: Aluminum prices might trade under pressure due to signs of ample supply, exacerbated by muted demand. There was no LME inventory inflow last week, while SHFE aluminium stocks continued to increase by 6,132 MT this week. Indonesia’s Inalum, one of the major smelters, is collaborating with Emirates Global Aluminium (EGA) to increase its aluminum production.
Sell Aluminium MCX JUL at 231 with a stop loss at 235 and a target of 225.
Zinc: Zinc has defied the trend due to a growing shortage in some Asian nations, particularly India, caused by shipment delays and the closure of a smelter in South Korea. Warrant cancellations at LME warehouses and technical buying have supported the rise in metal prices. However, a significant inventory inflow of 22,800 MT, the highest this year, halted the rally.
Sell Zinc MCX JUL at 265 with a stop loss at 270 and a target of 257.
