Slump casts shadow on metals

MARKET OUTLOOK

Governments of these countries, mainly those of India and China, may work hard to curb inflation that has been growing in tandem with the gross domestic product (GDP). This may divert their attention away from infrastructure growth, which will curb the global demand for metals.

The strike at one of Chile's Codelco mines may end anytime soon and copper supply is likely to resume subsequently. Codelco has shut three mines after the protest began on April 16.

The market is also seeing a fresh addition of hidden stocks and hence prices are set to move south. "The red metal prices are expected to decline," said Navneet Damani, an analyst at Anand Rathi.

China's loss of 500,000 tonnes of zinc due to the recent devastating earthquake has already led to a firming up of the metal's price, which may continue this week as well.

Additionally, China, the world's largest producer and consumer of metals, has already stopped work on the 120,000 tonnes Bosai Minerals Group's aluminium plant and 100,000 tonnes Sichuan Hongda Chemical Industry's zinc plant.

However, much would depend upon the behaviour of the dollar against major global currencies, especially the euro. If the dollar continues to strengthen, all base metals would then move one way forward, warned an analyst of one of the large brokerage firms.

Meanwhile, strong fundamental support lifted base metals, barring nickel, on the London Metal Exchange (LME), the world's largest metals trading bourse. Aluminium prices shot up by 5 per cent to close the week at $2,990 a tonne, while zinc ended with a gain of 7.60 per cent at $2,323 per tonne.

Copper and lead recorded a weekly surge of 2.34 per cent and 3.07 per cent respectively to settle at $8,470 and $2,300.5 a tonne respectively. Tin gained 2.19 per cent at $25,240 a tonne.

On MCX, the aluminium May