Commodities Try Hard To Recover

While certain political and healthcare issues created ripples in the commodities’ markets, a slowdown in industrial production was also responsible for the overall drag 

A majority of the commodities traded in the positive territory during the fortnight apart from lead, gold and copper. Commodities seemed to have pulled up their socks to dominate while the world struggles to recover from the second wave of the pandemic. The commodities leading the list were Brent oil and crude oil which posted gains of 5.85 per cent and 5.12 per cent, respectively. The surge in oil prices is backed by fuel demand recovery that is expected due to the accelerating pace of vaccinations in the US and Europe, leading to revival and higher mobility. Ease in lockdown measures, lower supply from OPEC and delay in Iranian crude returning to the market also contributed in supporting the oil prices to climb up.

The next set of commodity futures which followed oil were MCX Zinc and MCX Silver. MCX Zinc showed an increase of 2.25 per cent whereas MCX Silver rose by 1.57 per cent. MCX Aluminium traded flat with gains of a mere 0.38 per cent. The aluminium inventories in the London Metal Exchange (LME) have plunged about 10 per cent. The fall in inventory levels is a result of China imposing stern energy consumption norms for handling the severe pollution problem that it faces. Cotton rose by a mere 0.05 per cent during the fortnight. Based on the USDA report, the global cotton production and stocks have portrayed a decline on a monthly basis.

"The copper prices slipped on account of China’s measures to curb prices and due to slowdown in industrial production in China and Europe"

Hence, MCX Cotton futures are expected to trade bullish going forward. Amongst the commodities trading in negative territory, MCX Copper witnessed the highest decline of 2.41 per cent. The copper prices slipped on account of China’s measures to curb prices. China has planned to release state reserves of copper, zinc and aluminium by the end of 2021. The sale for aluminium and zinc is likely to be higher than copper. A slowdown in industrial production in China and Europe dragged the copper prices during the fortnight. On the other hand, MCX Lead and MCX Gold shrunk by 0.06 per cent and 1.67 per cent, respectively. Gold prices dipped due to weak global cues and the strengthened dollar. However, the downside for precious metal was capped by depreciation in the rupee.