Scrap Metal Prices and Scrap Metal Auctions

The base metals complex traded mixed on Wednesday as the market is currently in a directionless phase, attracted by various factors. Major significance lies in the US Dollar movement as it is mainly affecting base metals movement.

Copper prices touched a high of $7,700 on the LME and Rs. 335.30 on the MCX yesterday. Inventories for the red metal declined marginally by 25 tonnes yesterday. Hence, yesterday’s inventory impact on copper was neutral. Aluminum prices declined almost 1% on the LME and the MCX yesterday on the back of a whopping rise in inventories by 25,050 tonnes. This indicated major surplus of the metal in the market and weakened sentiments. Tin prices increased on due to fresh supply-related worries amid a drop in LME inventories by 150 tonnes yesterday.

On the macroeconomic front, the US Dollar steadied on Wednesday as a recovery in gold and oil prices coupled with concerns over the US financial system weakened sentiments for the currency. In the past few days, the US Dollar gained on the back of weakness in oil and gold prices and concerns over slowdown in the Eurozone.

OUTLOOK

Copper prices have suddenly witnessed a change in trend although LME inventories are on the higher side. Since, the change in price trend is not backed by a rise in demand or any other fundamental factor; we feel that this rise in prices could be short-lived and lead to profit-booking in the red metal. However, we do not foresee a declined below $7,200 in the short-term. Aluminum prices will directly follow the trend in crude oil prices. If crude oil prices fall then concerns over production of primary aluminum will ease and aluminum prices will decline. A rise in crude oil prices could ease these concerns and push the metal higher.

On the macroeconomic front, the US is expected to announce data on Initial Claims, Leading Indicators and Philadelphia Fed today. Consensus for the data indicates that it will be in the negative territory and will impact the US Dollar negatively. This is expected to give a push to base metal prices as weaker US Dollar makes base metals attractive for holders of other currencies.

We expect trade in base metals to be volatile and directionless as prices have jumped in times of a slowdown in demand and rising inventories. Currency movement is also playing a key role and we expect base metals to track the US Dollar.

Copper

LME copper prices are looking firm as prices have taken good support at $7500 (10-DMA). Prices on LME shall find strong support at $7525/7428 & resistance at $7710/7798.

MCX Aug contract shall find immediate resistance at Rs.333.80 level. Further above, resistance is seen at 340.60 levels. Whereas support is seen at Rs.321.85 levels & further below at 316.50.

Zinc

Zinc prices are looking sideways up, with prices likely to find strong support at $1700-1675 levels and resistance is seen at $1750-1775 on LME.
Immediate support is seen at Rs.74.55 levels for MCX Aug contract whereas crucial support is seen Rs.73.25 levels. Short-term resistance is seen at Rs.77.00 whereas major resistance is seen at Rs.78.30.

Zinc prices are currently trading around 93 levels. Immediate support is seen at Rs 92.30 levels for MCX Feb contract whereas crucial support is seen 90.60 levels.
Short-term resistance is seen at Rs95.40 whereas major resistance is seen at Rs97.

courtesy: www.commodityonline.com/commodities/metals/1.html

Filed under: Base Metal Prices