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India Base Metals:Nickel up on supply deficit; virus fear caps gains

Tuesday, Feb 25

 

By Rituparna Ghosh

 

NEW DELHI – Futures contracts of nickel rose over 1% both on the Multi Commodity Exchange of India and the London Metal Exchange after reports from the International Nickel Study Group showed a significant supply deficit of the metal last year, analysts said. 

 

Reports, citing data from the study group, said there was a supply deficit of 30,000 tn in 2019, nearly 80% lower than the previous year. 

 

However, the rise in nickel prices was capped due to subdued demand from the metal industry and rising stockpiles at the LME-monitored warehouses, and those monitored by the Shanghai Futures Exchange. 

 

Nickel stock at the LME-monitored warehouses stood at 230,256 tn today, its highest level in one-and-a-half years. Stockpile at the Shanghai warehouses stood unchanged at 35,709 tn today, data showed. 

 

Zinc, lead, aluminium and copper prices also were higher today on bargain buying after prices fell sharply on Monday. 

 

Reports that about 86% of nonferrous metal firms in China resumed work after the extended Lunar New Year break, due to the outbreak and spread of the coronavirus, supported sentiment today. Moreover, hopes that the Chinese government will take more steps to support the economy also aided metal prices today.

 

However, concerns over the spread of the virus outside the country capped gains. 

 

According to reports, the virus has resulted in the death of 2,663 people in China, with 77,658 cases reported. South Korea reported 60 more cases, bringing its total to 893. 

 

"All over the world, but especially in China, the outbreak of the virus is causing more and more events to be cancelled or postponed, including for example the National People's Congress of the Communist Party that was scheduled to begin on Mar 5. At this meeting the government normally announces the economic targets, as well as any potential economic stimulus measures, for the year in question," Commerzbank AG said in a note. 

 

At 1830 IST, on MCX, the February futures contract of:

–aluminium was at 136.10 rupees a kg, up 0.1%
–copper was at 427.50 rupees a kg, up 0.2%

–lead was at 145.05 rupees a kg, up 1.7%

–nickel was at 924.2 rupees a kg, up 1.1%

–zinc was at 156.35 rupees a kg, up 1.3%

 

OUTLOOK

On the MCX, the February copper contract is seen at 426-444 rupees per kg. The same-month nickel contract is seen at 890-965 rupees per kg in the evening session. The February contract of zinc is seen at 155-171 rupees per kg, and the same-month aluminium contract at 134-142 rupees, Bonanza Portfolio said in a note.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Aditya Sakorkar

 

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