Base metals register good gains

Copper rises for second straight day

Copper prices ended substantially higher for second straight day at Comex on Thursday, 17 March 2011. Prices had climbed up for the first time in six days yesterday on expectation that reconstruction needs after Japan's largest quake on record will boost demand in three to six months. Prices had dropped before that as US and world stock markets crashed considerably after fearing its worst nuclear catastrophe since Chernobyl nearly 25 years ago.



Copper for May delivery gained 14.75 cents or 3.5% to $4.34 a pound at Comex on Thursday. Last week, copper lost 5.8%.

Three-month-delivery copper on the London Metal Exchange ended higher by $285 (3.1%) at $9,545 a metric ton.

For the month of February 2011, copper prices gained 1.3%. Before this, in January, copper prices finished flat.

It is estimated that factory shutdowns, power cuts and the impact on consumer confidence may hurt Japan's GDP for months, while contributing to growth later as the country rebuilds plants, homes and infrastructure. Metals used in Japan, which represents about 5% of global demand, will probably jump after an initial slump as the country rebuilds infrastructure. Reconstruction and refurbishing of damaged plants, buildings and infrastructure should lead to greater commodity consumption, particularly building materials.

A devastating earthquake coupled with a Tsunami rocked Northern Japan last weekend. Fears that the nuclear reactors, damaged by the quake, are at risk of a meltdown added to the country's woes.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, weakened. The dollar fell mainly against the yen.

Economic data showed that the consumer price index rose 0.5% last month. The so-called core rate, which strips out the volatile food and energy categories, rose a lesser 0.2%. Consumers paid higher prices in February, mainly for gasoline and vegetables, as the cost of many basic staples continued a recent upward trend.

Among other traded metals at LME, lead in London rose 0.5% to $2,594 a ton and nickel gained 0.3% to $25,015 a ton. Aluminum rose 0.4% to end at $2,468 a ton, and zinc climbed 0.1% to end at $2,290 a ton.

At the MCX, copper prices for April delivery ended higher by Rs 14.65 (3.5%) at Rs 436.3/Kg. Prices rose to a high of Rs 437.9/Kg and fell to a low of Rs 420.8/Kg.