Shine is back
Mumbai, June 14: Metal prices are on an upswing following signs of an economic recovery in the US and higher consumption by China.
The Asian country, seeing heightened industrial activity, has imported 4,22,666 tonnes of unwrought copper and semi-finished products in May, up nearly six per cent from 3,99,833 tonnes in April.
Copper has led the rally with prices rising more than 70 per cent since the beginning of this year. At the London Metal Exchange, it is now trading in the region of $5,230 per tonne compared with $3,000 per tonne in the beginning of this year.
Zinc prices have also risen around 34 per cent and are now ruling around $1,400 per tonne, up from a little over $1,200 per tonne in early 2009. Aluminium is up 10 per cent to $1,600-per-tonne levels from $1,490.
Analysts feel the bullishness is likely to continue because of an improved outlook on the global economy.
Many brokerages have upped their forecasts for commodities such as copper.
The main driver of these (commodity price upgrades) are the improved supply-demand fundamentals in China in 2009, which have tightened many markets from the over-supplied position that existed in late 2008 and looked set to persist for most of 2009, Macquarie Commodities said in a recent report.
The upswing in prices has not been lost on the stock markets either.
Metal stocks have been one of the key gainers, and the BSE metal index has risen 122 per cent in 2009, outperforming the sensex, which has risen 53 per cent.
Some observers are sceptical of the price rise.
Base metal prices have recovered recently because of the weakening dollar against other currencies and increasing demand from China. However, the rise cannot be sustained as capacity overhang still continues and the underlying demand is weak. This will take time to recover, Pawan Burde, metal analyst at Angel Broking, told The Telegraph.