Copper and aluminium have seen an all-time high in Indian markets. For copper it has been about strong demand and the inventories which have continued to decline on LME and Shanghai as well.

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On aluminium - it is about China and Australia, we have seen a fallout there and there has been a statement from China saying all economic activities with Australia as of now stands suspended. So that is pushing the aluminium prices on the higher side as well.

On fallout between China and Australia and its impact on commodities, David Lennox of Fat Prophets said, “The information that has come out of China is somewhat disturbing from Australian point of view, but also it is now going to put a lot of tension inside the commodities market primarily because Australia is a major supply into the Chinese market. So if we do see the disruptions going through, that is going to cause in the near term anyways some significant requirement for the product to be found and sourced elsewhere from the Chinese. That is probably not going to be an easy task in the short-term.”

On copper prices Lennox said, “Copper is reacting as we have seen to the global growth that we have seen now, really it has started to get entrenched inside investors and traders mind. With that entrenchment of growth, we have seen a significant demand for the commodities, also we are getting a supply squeeze. So when we are seeing demand become more resurgent and we see that supply squeeze that is now putting significant pressure on the copper price.”

“We will see some consolidation, but if we see further rallies it will have to do with the direction of the US dollar. If we see that US dollar start to trend lower again, and we have seen that across the course of the Asia then it is going to continue to put a significant tailwind behind the commodity space, that tailwind should support many rallies going forward. So from here, we have probably now seen the demand and supply squeeze and the demand growth that we will need to now see the direction of the US dollar just to ensure that we see a continuation of any rally inside the base metals prices and it will be across the board of spectrum.”

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(Edited by : Aditi Gautam)

First Published:May 6, 2021 2:53 PM IST