Base metal prices fell on Tuesday as dollar gained, with the European Central Bank (ECB) revealing its intention to “front-load” its quantitative easing programme to support the region’s economy in turmoil.
Nickel fell by a steep 2.16 per cent to hit the lowest in almost three weeks and settle at $13,390; lead plunged to a five-week low to $1,936. Copper and aluminum, too, followed suit to settle at a multi-week low.
The ECB on Tuesday morning disclosed it would bring forward asset purchases. ECB executive board member Benoit Coeure said European bonds and stocks rose, while the euro weakened against the dollar, reducing the appeal of greenback-denominated commodities for users of the European currency.
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Meanwhile, European markets are trading higher, as the ECB suggested it may speed up its 1 trillion euro bond-buying campaign slightly to account for lower market liquidity in high summer. Asian markets ended on a mixed note and the US stock futures are trading in the green. German ZEW Economic Sentiment for the month of May declined to 41.9 as compared to 53.3 in April. Final CPI for the month of April remained unchanged at 0.0 per cent. UK’s Consumer Price Index for the month of April declined by 0.1 per cent as compared to ‘nil’ per cent in March.
“The recent upward level is more or less adjusted which suggests that the present level is sustainable. Which means base metals would move in close range at least for some more time,” said Thiagarajan.
With fresh addition of 1,314 tonnes, nickel inventories in warehouses tracked by the LME reached a record. Inventories for other metals in the LME — registered warehouses continued to decline due to the lack of new arrivals.
On the domestic front, base metals followed global suit. Lead futures on the Multi Commodity Exchange (MCX) fell by 1.16 per cent on profit-booking as speculators offloaded their holding at prevailing higher levels amid a weak global trend. The metal for delivery in May fell to Rs 123.40 a kg. Similarly, copper for delivery in August fell by 1.75 per cent to trade at Rs 409 a kg.