Shares of copper and aluminium producers gained on June 18 despite weakness in the broader metals space, with Hindustan Copper, Hindalco and Nalco ending marginally higher even as the Nifty Metal index ended down over 0.7 percent.
This comes as prices of both the non-ferrous metals rose on reports that European inventories have significantly fallen amid rising geopolitical tensions in the Middle East. Copper futures with July expiry on the MCX were trading at around Rs 888.50, while those of aluminium were trading near Rs 247. Copper's prices on the London Metal Exchange have seen a notable rise.
Copper inventories have dropped 25 percent MoM in May, while those of aluminium fell 10 percent, according to data cited by Tata Mutual Fund. The fall in inventories may be due to a rise in the demand for these metals, which could cause further increase in prices, benefitting the margins of these companies, said experts.
Home prices in China have been in a no-growth trend to nearly two years despite policymakers' efforts to revive the sector, at a time when property investment are falling. "As China's housing market & real estate ties into copper, it hurt the copper price. Moreover, Copper inventories fell by 25% in May compared to a month ago, indicating at a higher demand," Tata Mutual Fund said.
"Aluminium inventories at registered warehouses have come down. Total aluminium inventories declined by 10% in May-25 as compared to previous month. Manufacturing PMI data in Europe, China and UK showed a contraction in manufacturing activity whereas, in US it showed expansion. China's manufacturing activity shrank for two consecutive months (April & May). Going ahead, weak global manufacturing activity is expected to weigh on prices," it added.
The prices are also expected to be influenced by the outcome of US Federal Reserve policy meeting, slated later tonight.
Hindustan Copper shares closed over 0.5 percent higher at Rs 254 apiece. The stock, which has a P/E ratio of over 52, has gained over 12 percent in the past one month, but has declined nearly 2.6 percent in last five days.
Hindalco Industries shares closed 0.42 percent higher at Rs 644 apiece, while those of National Aluminium Company (NALCO) ended the session 0.5 percent higher at Rs 186 apiece.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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