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Suresh P. Iyengar

Mumbai, Sept. 16 The fall in prices of industrial metals such as copper, zinc, aluminium, lead and nickel is likely to benefit steel, construction, electrical equipment, cable and battery manufacturers, besides transportation and packaging industry.

Mr N.C. Mathur, Director, Jindal Stainless, said nickel, a major input for stainless steel manufacturing, has dropped to $18,500 a tonne in the second quarter of this fiscal from $51,800 a tonne in May 2007.

Similarly, steel manufacturers have recently agreed to reduce prices as the input cost dropped considerably. JSW Steel, Essar Steel and Ispat Industries recently reduced the steel prices by Rs 2,000 a tonne.

Base metals have been under pressure in the last few months on waning demand on the back of global economic slowdown, rising inventories and expectation of new capacities going on stream. In India, the rupee depreciation against dollar has partially offset the dip in prices.

On Tuesday, base metals were hammered after Lehman Brothers was suspended from trading on its electronic platform “Select” and declared it a defaulter under LME rules.

The US investment bank, which filed for bankruptcy on Monday, will still be able to trade in base metals on the LME via the telephone market. The LME felt trading on electronic platform would be anonymous and it was appropriate for its members to make a conscious decision to trade with Lehman Brothers, analyst said.

Lehman Brothers was a category two member of the LME through its European operations, Lehman Brothers International (Europe).

“Lehman was declared defaulter and suspended from trading on the LME. It has big positions in base metals and unwinding them in the commodity and derivatives markets will cause problems,” said Mr Harish Galipalli, head of commodity, Karvy Commodities. Copper inventory on the LME rose 1,275 tonnes to 204,350 tonnes on Monday and pressured the red metal further.

Zinc prices were also pressured down as the global zinc market was reported to be in surplus by 77,000 tonnes in the first seven months of 2008. It was down by $15 at $1,750 a tonne. Copper was down $135 to $6,820 a tonne, nickel $421 to $17,829 a tonne, besides aluminium $41 to $2,533 a tonne and lead shed $54 a tonnes to $1,790 a tonne.

On MCX, while copper, lead and aluminium were trading down, nickel and zinc gained marginally. “One should understand that base metals are depressed last few months and any minor sign of global economic recovery will boost the demand,” Mr Galipalli said.

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