MCX Copper Updates ( Base Metal )

The entire Copper and Base Metals complex can remain under pressure over the next few months. With weaker Chinese economic activity & continued growth fears globally, more specifically in Europe, Copper and Base Metals complex should remain under pressure, grinding lower over the coming months.

Markets generally tend to be slower in anticipating negative than positive developments. The slight bounce up in Copper and Base Metals following Chinese GDP numbers yesterday may have largely been on short covering & may not last longer. The short covering in copper has resulted in some tightening of the nearby spreads. Along with Copper, Base Metals like Aluminum, Nickel, Zinc, Lead and Tin were also stronger.

China’s gross domestic product (GDP) grew 7.6% in the second quarter from a year earlier, in line with estimates. June industrial-production growth of 9.5% was just below forecasts, while a rise in fixed-asset investment of 20.4% was above the consensus. China’s economy is still growing, but is likely expanding at a much slower pace than the official numbers indicate. But the IP (industrial production) component came in below expectations.

Copper prices generally rise on positive Housing Data. But the recent encouraging Housing Data from the US should not be looked upon as a major Economy Booster as it no more plays the important role in the GDP as it did a few years ago & neither are these news any solid indicator of an improvising housing sector in the US. Housing sectors now accounts only for 2.3% of GDP as compared to a 6.3% in the pre 2008 times. Distressed sales also accounts for a larger share of the total housing sales rather than new home sales, which largely indicates the current state of this sluggish sector in the United States.