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Below is Weekly Base Metal Report by Mr. Saish Sandeep Sawant Dessai, Research Associate- Base Metals, Angel One Ltd

The industrial metals pack continued to witness pressure during the week, as all the metals ended on a negative note with aluminum being the top loser, down 4.9 percent.

Metal prices continued to remain under pressure, with aluminum prices falling to a seven-month low on fears of further lockdowns in top consumer China, as well as inflation fears and increasing interest rates triggering a sell-off.

The pressure on base metals came as the outlook for demand deteriorated following the Federal Reserve's large rate hike, which fuelled fears of a recession despite signs of improvement in China. Metals demand is in jeopardy as developed-country monetary policy tightening threatens to hinder economic growth and trigger a likely recession. The dollar index, which rose to a new two-decade high, made greenback-denominated commodities more expensive for buyers using other currencies.

However, prices saw some respite after Copper and Aluminium prices rebounded after the top metals consumer, China, saw stronger-than-expected economic data that foreshadowed an uptick in demand. Following a slump in April, China's economy showed signs of a rebound in May, with industrial production unexpectedly rising by 0.7 percent after falling by 2.9 percent in April. Declining stockpile levels and constrained supply mitigated some of the metals' losses.

Outlook: We expect copper to trade lower towards 733 levels, a break of which could prompt the price to move lower to 723 levels.  

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