Slack demand may dent metals

MARKET OUTLOOK

Friday's sluggishness in the base metals market is likely to continue in the week ahead. Base metals, led by copper, are in a bearish phase following speculations that the growth in demand from China, the world's largest user of metals, will slow down after the nation bought more than it needed earlier this year.

Last week, copper remained volatile on the LME. On Friday, copper shed $40, closing at $7,510 from Thursday's close of $7,550 a tonne. Zinc closed at $3,525 a tonne ($3,574 on Thursday) with a loss of $49.50, while aluminium and tin slumped by $7.50 and $250 a tonne, closing at $2,659.50 ($2,667) and $13,900 ($14,150) a tonne respectively.

Besides, with the strike threat averted at Chile's state-owned Codelco mine "" the world's biggest copper producer "" there is a positive sentiment that the metal supply may not be disrupted for now.

Meanwhile, rising inventory in the London Metal Exchange-registered (LME) warehouses is a cause for major concern, indicating that the hidden and hoarded stocks would continue to flow into the market for profit-booking.

Back home, domestic traders are mulling the idea of fixing the price of copper products and selling them for profit, irrespective of the price movement on the benchmark LME and the wholesale domestic markets.

"It's quite difficult to sell our products at a loss as the $100-150 a tonne price movement in either direction has become common on the LME. Therefore, we fix our own price and if a customer needs the products, he would buy them," said a local trader.

Local traders are abstaining from fresh bookings as they apprehend a repeat of the nickel saga on the LME. Nickel slumped by $16,000 a tonne in the last one month, leaving an unbearable losing mark on position holders.

Meanwhile, workers at the Radomiro Tomic copper mine last night accepted a proposal that included a wage increase of 3.7 per cent above inflation, said Arturo Cruz, director of the mine workers' union. The union on June 15 had threatened to blockade two Codelco mines to press for their demands. China's copper imports, the biggest in the world, fell 37 per cent in May from the previous month as shipments earlier in the year boosted stockpiles and domestic output reached a record.