NEW DELHI :  Base metals futures on the MCX fell over 1-4% today tracking slump in benchmark contracts on the London Metal Exchange, where three-month copper and nickel futures hit fresh lows, analysts said.

On Monday, the three-month copper contract on the London Metal Exchange hit an over six-year low of $4,444.00 per tn in Asian trade. The nickel contract hit a fresh 12-year low of $8,175 per tn.

“LME copper prices plunged 1.8% and fell below $4,500 for the first time since May 2009 as the possibility of higher interest rates in the US weighed on the metal,” Angel Commodities said in a report. At 1915 IST, the LME copper contract was at $4,468 per tn, down 1.87% from previous close, and nickel was at $8,280 per tn, down 4.39%.

“London copper slipped to a fresh six-and-a-half year low on Monday, as traders bet metals prices had further to fall given China’s slowing factory demand,” ADMISI Commodities said in a report.

China is the world’s leading consumer of most industrial metals and accounts for over 40% of the global copper trade. Besides, strengthening of the greenback against the euro also weighed on LME base metals. Nickel prices declined sharply due to slowdown in demand for the metal from the stainless steel sector. Nickel is used in manufacturing stainless steel.

On the inventory front, fall in stocks of base metals at LME-monitored warehouses lent some support to prices.

Dollar rallies

Back home, base metals on the MCX traded down on global cues, but depreciation in rupee against the dollar cushioned the fall.

The Indian unit ended at 66.47 to a dollar, against Friday’s close of 66.18, the lowest level since Sep 11. A weak rupee makes the import of dollar-denominated commodities expensive and vice-versa.

The rupee is seen taking cues from the US Federal Reserve unscheduled meeting due later today.

Dealers said that if the US Fed increases its discount rate later, the dollar will surge as expectations of a rate hike in December will strengthen further.

However, if the central bank leaves the discount rate unchanged then most dollar long positions built today may be liquidated.

The dollar gained after San Francisco Fed President John Williams said there was a “strong case” for a December rate hike if data doesn’t disappoint.

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