“After months of lockdown
to prevent the spread of coronavirus, the global economy is gradually opening up which raised hopes for a revival in the demand of both metals and crude oil. During this lockdown
period, both construction and industrial activities came to standstill. Thus, the demand for industrial metals
was severely hit. Also, closure of the transportation system reduced global demand of fuel. But, their demand is set to revive now with economies opening up,” said Naveen Mathur, director (commodities and currencies), Anand Rathi Shares and Stockbrokers.
After hitting a 10-week high of $5,457.5 a tonne on May 21, copper had declined amid uncertainty over a revival in the global economy. Now, its price has started firming up again. The gradual opening up of the global economy has revived hopes for a resurgence in its use in the construction and power sectors, which use around two-thirds of global copper production.
Analysts, however, say the Covid-19 pandemic has inflicted permanent damage upon the global economy but hopes are alive for activities to return to normal with countries pumping in fresh money into the system through quantitative easing. Many developed and developing economies, including India, China, Japan, and the United States, have announced stimuli worth billions of dollars.
“Base metals and energy also got support from United States President Donald Trump apparently softening his stance on the US-China trade war. The markets
were expecting some tough stance and hard talks by the US president with some trade-related strong measures on Friday. But, nothing was concluded from his talks. Hence, the markets
perceived it as supportive for base metals and energy,” said Priyanka Jhaveri, assistant vice president, Kotak Securities.
had feared any tariff row would undermine the already dampened global economy and further weaken the metal’s demand.
On Friday, Trump’s response to China’s security legislation on Hong Kong was not as severe as the markets had expected. Trump ordered the process of eliminating special US treatment to Hong Kong but did not mention any action that would undermine the US-China Phase I trade deal.
A private business survey showed China’s factory activity unexpectedly returned to growth in May, while a similar survey for larger Chinese firms showed rising activities in the services and construction sectors. However, both surveys showed export orders shrank due to the ongoing lockdown
in importing countries.
However, protests in Honk Kong, Taiwan, and the United States continue to pose risks.
BSE launches gold mini, silver kg options
In its endeavour to offer new products to commodity market participants and to deepen the market ecosystem, the BSE on Monday launched options on goods contracts like gold mini and silver kilo. The two contracts launched are gold mini (100 gram) and silver kilo, the exchange said. These contracts were launched by S K Mohanty, whole-time member of markets regulator Sebi. "The options on goods contracts shall enable small-time jewellers, retailers to come forward and hedge their price risk on the BSE's commodity platform," said Ashishkumar Chauhan, MD and CEO of the BSE. PTI