Nickel cathodes biggest gainer, follows London exchange cue

BASE METAL REVIEW

Nickel cathode was the biggest gainer in Mumbai non-ferrous metals market with a gain of Rs 7 per kg to Rs 735 per kg last week.

The silvery white metal was responding to the similar growth on the London Metal Exchange (LME) where the metal gained $210 per tonne to $13,815 on cash basis. Since the low grade stainless steel was introduced in the market, nickel prices are witnessing pressure.

Spot copper in the domestic market surged because of intermittent rise in prices in the international market.

Wire bar gained Rs 4 per kg last week, taking it to Rs 229 per kg in Mumbai. Healthy gain was witnessed in copper scrap section too with heavy scrap, light scrap, utensil scrap and sheet cutting jumping by Rs 6, Rs 6, Rs 4 and Rs 6 to Rs 208, Rs 199, Rs 181 and Rs 193 per kg, respectively.

Fund buying of copper has increased in recent days due to greater buying interest over higher oil prices concerns and hurricane threats. Besides, speculative money inflows into commodities is also pushing the market up continuously. The supply tightness projected last week by the Shanghai Futures Exchange also triggered fresh booking by traders.

The demand for copper has risen in the international market pushing Indian traders to cover position. This is the peak time now for copper from where no further upward movement is projected.

All leading copper producers including those in India have expanded the capacity and some of them have already started the trial and commercial production. That may push its glut in the market. Though the domestic market is witnessing supply shortage at present, the upcoming infrastructure development projects are expected to boost copper consumption in the country. Therefore, copper producers and processors have already started taking positions to secure future supplies.

This is the time for slowing down the speed, said a trader. At the current higher price, no trader is willing to book material as they are sceptical about continued growth in prices in future.

"I do not want to increase overheads by spending on copper today. Rather I would be content with wait and watch move as no one knows when the price will start declining and the finished goods would be sold at the current rate or not," added the trader.

"Business volume has slowed down and a scary situation has been created in the market," he cautioned.

Spot copper on London Metal Exchange perked up by $303 to $3978 per tonne on Friday. Copper on 3-month basis shot up to $3793.5 on Friday in comparison with $3530 on Monday.

A development in the international market leaves a significant impact on domestic prices and the current rising trend in copper industry is the consequence of warehouse stocks at low level and rising demand from consumer industries coupled with supply disruption from major producers due to maintenance shut down.

Little movement was seen in aluminium prices throughout the week with ingot and utensil scrap in the domestic market remaining at Rs 102 and Rs 84, respectively, without any significant change.

Spot aluminium gained approximately $89 in the week under consideration from $1,777.5 on Monday to $1,866 on Friday.

The poor men's silver also moved up in the similar range on 3-month basis from $1,788.5 to $1,874 at the end of the week.

In spite of phenomenal growth in zinc prices from $1,343.5 per tonne on Monday to $1,415.5 per tonne on Friday, zinc slabs in Mumbai lost steam because of no-tak ers in the domestic markets and closed at Rs 89 per kg with a loss of Rs 1.5 in the week.

Lead and tin closed unchanged at Rs 54 per kg and Rs 398, respectively, in Mumbai while the cash metals on LME surged to $972.5 per tonne on Friday from $884.5 per tonne on Monday and $6,335 per tonne on Friday to $6,855 per tonne from Monday.