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Monthly report on Base Metals for September 2017 -
Monthly report on Base Metals for September 2017
SMC | Published: 08 Sep, 2017  | Source :


Overview and outlook:
Copper remained on strong path in the month of August as it moved in 402.45-438.40. China saw solid growth in the first half and data last week showed China's manufacturing sector unexpectedly accelerated in August, suggesting the economy is still expanding at a healthy clip. The metal has gained 48 percent over the past year, a standout performance that's the best by some margin of the London Metal Exchange's main industrial metals. Cancelled warrants in LME Copper currently stand at more than 50 percent of the total stocks. Besides, Indonesia and Freeport-McMoRan Inc reached an agreement to allow the U.S. miner to keep operating its giant Grasberg copper mine. Copper has jumped 20 per cent since the end of the May, helped by positive economic data from China, the world’s biggest consumer of commodities, and a weak US dollar. Investors have also piled into copper, a key source of earnings for major mining houses such as Glencore and BHP Billiton, betting that it could be one of the big beneficiaries from the growth of electric vehicles and advances in energy storage technology. Spot premiums -- the spread between prices on the London exchange and spot markets -- have been shrinking since late July. The premium on the Shanghai spot market has fallen 7% since then, standing at $65 per ton in late August, even as the price of copper has marched upward.

Looking ahead, copper prices may remain on upside path as its prices can trade in range of 410-465 in September.


Overview and outlook:
Nickel prices ended the month of August on stronger note due to supply concerns and rally in steel prices in China. Overall it moved in range of 647.50-757. Nickel prices can move in range of 720-840 in the month of September 2017.

LME nickel got support as lawmakers in the Philippines, the world's top nickel ore supplier, have filed a bill to ban mining in watershed areas and halt exports of unprocessed ores.

Nickel prices may continue to rise amid a fresh crackdown by Chinese environmental regulators in several key nickel producing regions. Nickel climbed to a two year high as bets on tighter markets, especially in top user China, buoyed Nickel prices. The metal used in making stainless steel was buoyed worries over exports from the Philippines, after data showed output fell 24 percent in the first half of the year amid an environmental crackdown that has seen at least eight nickel mines suspended since last year.


Overview and outlook:
Lead prices ended the August month on positive path as ban of Lead ore from North Korea and decline in inventories have supported the prices higher. Among other restrictions, the new sanctions call for a total ban on North Korea’s major exports namely lead and lead ore ($113 million) and iron and iron ore ($251 million). Nikki Haley, the U.S. ambassador to the UN, has described the latest UN sanctions on North Korea as “the most stringent set of sanctions on any country in a generation.

Overall Lead prices moved in the range of 146.90- 161.50 last month in MCX. In the month of September lead prices can trade in range of 142-162.


Overview and outlook:
Zinc prices ended the month of August on positive note due to supply concerns and increasing demand from steel sector. Zinc moved in range of 175.65- 203.40. Zinc touched its highest since August 2007 in LME on expectations of strong demand from top consumer China, supply concerns and declining stockpiles. China's crackdown on pollution could hurt the country's smaller zinc miners and support prices.

Zinc can hover in range of 185-215 in the month of September. Iron ore has risen to its highest level in five months, while Zinc prices are at their highest level in 10 years.


Overview and outlook:
Aluminum traded with upside bias as it moved in the range of 120.95-135.90 in the month of August. Aluminum prices continue to find support owing to prospects of capacity shutdowns in China. Reports suggest that China will also prevent an increase in local governments' hidden debts and push forward with capacity cuts in the coal-fire power and aluminum sectors.

About SMC
SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.