It required some courage to predict a base metals rally amidst economic gloom although skeptics may say that it is purely technical. After few weeks of continuous loosing streak, the US and European equities shrugged off indifferent economic news to close strongly by the end of last week. Base metals shorts were caught off guard by Chinese buying early last week that had the shorts worried and scampering for cover. However, from here on further rally in equities may not necessarily translate into firmer base metal prices but the dominant shorts may be tempted to take profits and hence provide the support to the prices. Next hurdle for copper is 1500-25 dollars tons band and there is a likelihood that copper price may test 1480s dollars before resuming their upward march. In the case of aluminium, further short covering looks a bit optimistic although any moves towards early 1300 dollars may be bought into. In rest of the base metals, lead, zinc and nickel are shadowing copper and aluminium and are likely to attract trade buying if we witness further firming up of copper and aluminium prices.
NSTL
