Base Metal/weekly: Copper may fall on weak global demand, higher supply
MUMBAI, FEB 14 : Copper may fall next week after gaining for a third straight trading session this week on demand worries from United States and China following weaker than expected economic data and on higher inventories, indicating oversupply situation, said analysts.
"Copper will fall on weak demand from China and US and on higher supply of the metal," said Priyanka Jhaveri an analyst with Kotak Commodities.
Prices of the base metals will be under pressure after retail sale in US, the second biggest metals consumer, slumped in January for a second straight month and after a government data showed that number of Americans applied for unemployment claims has risen in the past week, fuelling worries over weak demand, said analysts.
United States jobless claims rose to 304,000 for the week ended Feb 6 compared to analysts' estimate of 285,000 and 279,000 a week ago while retail sales in January fell 0.8% compared to consensus estimation of 0.5% decline and 0.9% fall, government data showed.
The soft core retail sales prompted Barclays to lower its first-quarter US GDP growth estimate by three-tenths of a percentage point to a 2.2% annual rate. JPMorgan cut its estimate to a 2.5% rate from a 3% pace.
The economy grew at a 2.6% annual pace in the fourth quarter. However, inventory and trade data for December was below the government's assumptions in the GDP report, suggesting growth could be revised to as low as a 1.8% rate.
Prices of the bullion will also be under pressure after China's consumer price index slowed more and producer prices have fallen for 35 consecutive months, said analysts.
China consumer price index in January eased by 0.3% compared to analysts' expectation of 0.4% rise and 0.3% growth a month ago while producer prices index in January fell 4.3% compared to consensus expectation of 3.8% decline and 3.3% fall a year ago, government data showed.
China import slumped to 19.9% in January lower than analysts' estimate of 3.5% fall and 2.3% decline a month ago, data from China's National Bureau Statistics showed.
China is the world's largest consumer of copper accounting for about 40% of total global demand and major consumer of other industrial metals.
Prices of the red metal process will also be under pressure on higher stockpiles of the metal on London Metal Exchange (LME), indicating oversupply situation, said analysts.
LME data showed copper stocks rose by a massive 32,500 tonnes to 284,600. The red metal stocks have soared 61% so far this year and are the highest in nearly a year.
Prices of the base metals will also fall on higher stocks warrant of the metal at China Shanghai, indicating oversupply situation, said analysts.
China Shanghai copper stocks on warrant up by 16,306 to 155,702 tons, aluminium stocks on warrant up by 2,815 tons to 188,842 tons, and zinc stocks on warrant up by 5,616 tons to 102,787 tons on week.
Prices of the industrial metals will also be under pressure on fear of lower level of physical buying in China ahead of festivals, said analysts.
Demand for the metals will be weak ahead of Lunar New Year in China, with traders reluctant to stock up given slowing demand growth and ample supply expected.
Copper for February delivery traded in Rs 362.50-348.05 per kilograms range this week and are likely to trade in Rs 364-348 per kilograms range next week.
For the past five trading sessions aluminium for February delivery traded in Rs 116.80-112.80 range on the Multi Commodity Exchange. Aluminium prices are likely to trade in Rs 116-111 per kilogram range next week.
Lead for February delivery traded in Rs 116.40-112.05 per kilogram range this week and may trade in Rs 116-111 per kilogram range next week.
Nickel for January delivery traded in Rs 949-907.40 per kilogram range in this week on the MCX. Nickel prices are likely to trade Rs 935-880 per kilogram range next week.
In the past five trading sessions on the MCX, zinc for February delivery traded between Rs 134.85-131.45 per kilogram range and expected to trade in between Rs 136-131 per kilograms rang next week.