Base Metals Rally on Weaker Dollar and Beijing's Market Boost

Mumbai, 07 Feb (Commoditiescontrol): Prices for most base metals witnessed an uptick on Wednesday. This surge is attributed to a softening U.S. dollar and a general uplift in market sentiment following Beijing's proactive measures aimed at bolstering its stock market.

Notably, three-month copper on the London Metal Exchange experienced a 0.3% rise, standing at $8,424 per metric ton as of 0730 IST. Concurrently, the highly watched March copper contract on the Shanghai Futures Exchange demonstrated stability, maintaining at 68,140 yuan per metric ton.

The dollar index, reflecting the U.S. currency's strength against a basket of other major currencies, experienced a decline for the second consecutive day. This downtrend follows a recent peak, which marked the dollar's highest position in nearly three months. The dip comes amidst robust economic indicators and the Federal Reserve's firm stance on interest rate adjustments, elements that had previously fortified the U.S. currency.

A devalued dollar typically reduces the cost for non-dollar holders to acquire commodities priced in the greenback, a factor influencing the current dynamics in the base metals market.

Adding to the positive market atmosphere, a series of strategic actions by Chinese regulators aimed at supporting share prices were introduced. This move comes in response to the market's slump to a five-year low, hence injecting optimism among investors and traders.

In a significant industry update, production at mines operated by Chile's financially challenged copper miner, Codelco, declined to 1.325 million metric tons in 2023. This information was disclosed by the company's chief executive in an interview with Reuters on Tuesday, with projections of a modest recovery in the upcoming year.

In other metal commodities, LME aluminium saw a marginal increase of 0.1%, reaching $2,232. Nickel remained relatively unchanged at $15,920, while zinc progressed by 0.4% to $2,441. Lead and tin also saw gains, with lead rising by 0.3% to $2,120 and tin maintaining stability at $25,187.

On the Shanghai Futures Exchange, aluminium rose by 1% to 18,960 yuan a ton. Zinc and tin also witnessed gains, with zinc adding 0.2% to reach 20,565 yuan and tin increasing by 0.7% to 209,690 yuan. In contrast, lead and nickel experienced declines, with lead dipping by 0.2% to 16,170 yuan and nickel falling by 0.5% to 123,900 yuan.

(By Commoditiescontrol Bureau; +91-9820130172)