Global cues dent metals

Base metals futures declined sharply on Tuesday on the domestic commodity exchanges on weak global cues.

Traders remained hesitant to pump fresh money into risky assets, where volatility in the range of $200-300 has become a normal phenomenon.

"Volatility of $150-200 does not leave much impact on the domestic markets as traders fix the price of their end production according to the cost of production. Hence, minor fluctuations such as this does not pursuade us to take our position," said Rohit Shah, president Bombay Metal Exchange. However, he confirmed the affect of large volatility.

Since Tuesday is a holiday in the local base metals spot market, speculators were reluctant to book profits in the absence of comparative spot prices.

The investors were unlikely to take big long positions ahead of Federal Reserve meeting later this month. Confidence has to be re-built, for which the Federal Reserve chairman Ben S Bernanke has assured to "act as needed" to limit the economic fallout from a housing recession. This indicates that Bernanke could take more measures to strengthen the US economy.

On the Multi Commodity Exchange (MCX), aluminium futures for September, October and November delivery declined by 1.14 per cent, 1.26 per cent and 1.47 per cent to close at Rs 99.80 per kg, 101.65 per kg and Rs 103.65 per kg respectively. Aluminum futures on the LME fell by $10 to $2,468.

Similarly, copper futures for November and February ended the morning session with a fall of 1.47 per cent each at Rs 297.55 per kg and Rs 296.80 per kg. The red metal dropped by $125, or 1.7 per cent to $7,265 a tonne on the LME.

Nickel for September and October delivery closed the day at Rs 1188 per kg and Rs 1203 per kg respectively, which is a decline of 2.96 per cent and 2.87 per cent from the previous day. On the LME, nickel stockpiles expanded 480 tonnes, or 2 per cent, to 24,804 tonnes, the highest since May 9, 2006. The benchmark contract declined by $650, or 2.2 per cent, to $29,150 on Tuesday.

Tin for September delivery closed at Rs 619.25 per kg, a decline of 2.98 per cent. The metal lost $295 to $15,000 on the LME.

Lead was the highest loser among all metals, with the September, October and November contracts slumping by 2.26 per cent, 2.27 per cent and 3.13 per cent to close the day at Rs 123 per kg, Rs 122.75 per kg and Rs 123.70 per kg respectively. The metal dropped by $80, or 2.7 per cent, to $2,940 a tonne on the LME.

Earlier, lead had fallen to $2,920 a tonne, the lowest since August 22. Prices are still about 10 to 15 per cent above what is justified by supply and demand, an analyst said. The LME-tracked stockpiles rose 100 tonnes to 25,300 tonnes, the lowest since March 1990.

Zinc for September, October and November closed with a decline of 3 per cent, 2.99 per cent and 3.44 per cent at Rs 122.95 per kg, 124.70 per kg and Rs 126.35 per kg respectively.