CAUTION: Further stock rallies not expected
THE base metal complex that was on a winning run till last week seems to be exhausted and prices are currently going through a corrective phase. In the international market aluminium, copper and zinc are the top gainers followed by nickel and lead. Since the start of 2017, aluminium, copper and zinc prices in the London Metal Exchange gained more than 20 per cent, while nickel and lead gained 17.3 per cent and 12.3 per cent respectively. LME aluminium is now trading near four-and-a-half year highs while copper is at its highest level since September 2014. Hope of slow but steady Chinese and global manufacturing growth, along with a weak dollar have supported prices. In the domestic futures market, prices rallied in line with international counterparts, but gains were limited due to a strong rupee.
Latest import data from the world’s top metal consumer, China, showed a stronger than expected growth in August which reinforced hopes of a healthy pace of a growing economy despite tighter policy. As per the data, imports of metals have grown 13.3 per cent in August against a forecast of 10 per cent which suggests higher than expected domestic demand. Meanwhile, export growth has softened since shipments fells in February.
GUEST COLUMN HAREESH V RESEARCH HEAD GEOFIN COMTRADE LTD.