Metal prices 'easing to realistic levels'

Metal prices seem to have entered a declining phase as demand from China tapers off. Lower Chinese demand and a strengthening dollar hammered metals late last month.

After peaking in early 2005, metal prices have started cooling off, National Aluminium Company Ltd (Nalco) said Friday.

"The overheated economy of China needed a huge amount of metal as it stepped up infrastructure building to host the Olympics," said C R Pradhan, chairman and managing director, Nalco.

"Now, the demand is declining and metal prices are tumbling." Metal prices soared on China's buying spree to satiate the economy, which grew by 9.4 per cent in the first quarter of 2005.

"We believe metal prices are realistic now...We do not see prices going up. Rather it (prices) will stabilise at the current level," Pradhan said.

Last month, aluminium prices fell 7.92 per cent, copper 4.30 per cent, zinc 4.38 per cent, and zinc 0.14 per cent. Prices of metals, except nickel, started declining from last month itself.

China has started to shift focus from importing metals to strengthening its mining industry. With the increased focus on mining, China will be able to get cheaper raw materials for metals, said Ramesh Agarwal, a Delhi-based trader.

Chinese dependence on raw material imports is too high. China imported alumina worth $1 billion in 2004 against $50 million in the previous year, he said.

Meanwhile, the mumbai base metals market saw prices of the metals move upward on the back of better performance on the London Metal Exchange (LME).

Locally, the price of nickel cathodes rose to close at Rs 842.00 per kg, from Rs 835.00 on Monday. Barring zinc and tin, all other metals saw smooth gains. Copper wire bars rose to Rs 209 from Rs 205 on Monday. Copper heavy scraps closed at Rs 179 on Monday from Rs 175.

Copper utensil closed up by Rs 2, at Rs 160 from Rs 158 last week, and brass utensil scraps displayed a similar trend and closed at Rs 127 from Rs 126 last week.

Brass sheet cutting closed at Rs 133 on Monday, from Rs 131.00, and Aluminium utensil scraps closed at the same as last week at Rs 85, where it had remained steady throughout. The price of aluminium ingots closed minorly lower at Rs 101, from Monday's Rs 103 and lead ingots remained without changing at Rs 52.50.

Zinc slabs closed at Rs 79 from Rs 82 last week. Tin slabs closed at Rs 451 drastically down from Rs 462 the previous week. Copper light scraps traded at Rs 174 from Rs 171.50 and Copper sheet cutting closed at Rs 169 from Rs 168.