Scrap Metal Prices and Scrap Metal Auctions

The base metals complex managed to hold on to gains made in the week as a weaker dollar continued to provide support. Also, good corporate earnings coupled with stronger than expected Chinese Q2 2009 GDP data also added to the positive sentiment. The equity markets continue to show strong upside and base metals are also taking cues from this market.

The world’s largest metals consumer i.e. China has shown a growth of 7.9% despite the recession in the Western world. This data indicated that the main driver of base metals demand continues to show a positive aide for demand for the future.

Aluminum performed well as the metal gained 2.3% on the LME, shrugging off another increase in inventories to a record high of 4.51 million tonnes. Metals like Copper, Lead and Tin ended in the negative territory. Copper inventories are continuing to decline despite the down cycle coupled with continued supply problems.

Nickel prices ended in the green after an inventory decline of 0.6%, pushing inventories to 107,988 tonnes the lowest since April 28. According to the International Nickel Study Group, the nickel market was in 94,000 tonne surplus in the January to May period. But the surplus has been shrinking in the recent months as production cutbacks brought supply closer in line with weak demand.

On the macroeconomic front, the dollar hit a six-week low against a basket of major currencies at one point before cutting losses as risk appetite eroded slightly following a weak reading on the US manufacturing sector. US economic data indicated that the number of Americans filing for unemployment benefits fell last week to the lowest level since January. But factory activity in the US contracted for the 10th consecutive month in July.

OUTLOOK

China is the driver of base metals demand and an improvement in China’s GDP indicates that the series of economic stimulus efforts were correct, timely and effective. China has shown a growth of 7.9% despite the recession in the Western world.

This data indicated that the main driver of base metals demand continues to show a positive aide for demand for the future. Copper prices have found good support above $5,000 on the LME and weakness in the dollar could help the metal trade stronger. The red metal could end the week on a positive note as Chinese economic data indicates that the economy is on track to meet the government’s 8% growth target, thereby increasing demand for the metal. Recent releases of economic data from China point out to the fact that a recovery is underway. Hence, it is bullish for Copper.

On the macroeconomic front, the US is expected to announce data on building permits and housing starts today. Building permits data is expected to show improvement but housing starts could decline further. This mixed data could raise concern in the financial markets and base metal prices could come under pressure.

Copper  – Copper prices are sideways up with immediate support for MCX August contract seen at Rs.252.70. Further below, crucial support is seen at 248 levels.  Whereas resistance is seen at Rs.259.25 levels & further upwards at Rs. 263 levels.

Zinc -  Zinc prices are sideways with immediate support seen at Rs.73.10 levels for MCX July contract whereas crucial support is seen at Rs.72.05 level. Short-term resistance is seen at Rs.75.25 whereas major resistance is seen at Rs 76 levels.

Courtesy: www.commodityonline.com

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