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| Base metals decline on firm dollar, rise in LME stock |
| Newswire 18 / Mumbai Mar 31, 2009, 00:16 IST |
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Base metals on the MCX were trading significantly down today, taking cues from the London Metal Exchange where prices slipped as the dollar strengthened against the euro, analysts said. The dollar usually has an inverse relationship with most base metals.
The greenback turned firm against the euro after a US government official said bankruptcy could be best option for General Motors Corp and Chrysler, two major US auto makers, which encouraged investors to buy the US unit as a safe haven, they said. General Motors had asked for $16.6 bIllion as additional assistance after receiving $13.4 billion since December.
Chrysler had requested for $5 billion after getting $4 billion. The two auto makers in the US have been hit hard by the economic slowdown and the worst decline in vehicle sales in 27 years.
Rise in metal inventories at LME-monitored warehouses also exerted pressure on the complex today, they said. “The General Motors news was extremely bearish for the complex today as it indicates bleak outlook for meals amid the ongoing slowdown,” said Prakash Prabhu, analyst, Greenback Commodities.
Also, rise in the LME stock of copper, aluminium, lead and nickel further exerted pressure on the complex today.
The Copper stock rose by 650 tonnes and aluminium by 6,575 tonnes.
Lead and nickel stock moved up marginally.
On the MCX, copper declined over 2 per cent along with lead, while aluminium and zinc contracts were marginal losers.
“Copper looks weak in the rest of the session. We recommend sell at every high,” Samson said.
Nickel prices shed nearly 1 per cent on the bourse, while tin was trading almost flat.
Most analysts were of the view that the complex looks bearish for the rest of the session today on adverse news regarding two leading US auto makers.
The market is also eyeing the speech by European Central Bank President Jean-Claude Trichet later today.
“The market movement is dependent on what Trichet speaks about the economy today,” said Prabhu.
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