Base metals - Trading tips for August 8th

When it comes to base metals, traders start pointing guns at US-China trade war. Most investors are keeping an eye on trade war news to start initiating long positions and we have seen prices consolidating again and again at current levels. Mostly range bound in past few sessions.

Growth in base metals are dependent on growing economies majorly infrastructure growth and so we saw a meltdown in this market.

One important thing to note is that China is major consumer for base metals and so investors do believe that prices might get a little support once we see positive news on trade-war.

The other side of the discussion which has been ignored is the demand in Chinese market. Trade-war is a concern but the bigger issue is that China has to deal with massive debt which has racked up past decade. Currently China debt levels are excess of those in US.

Another important thing to note is that China accumulated the debt and at fast pace almost around 150 percent compared to it GDP.

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Most of this debt was invested in infrastructure but useful construction was quite less compared to Ghost cities. China is invariably in this position at short period of time and so we might see China going through financial crisis in near future.

With growth issues in China economies and President Trump imposing more tariffs, we can further notice sharp decline in the base metals. Looking at fundamentals and demand in other countries, we can definitely see support for prices but it is difficult to look at big numbers.

I am sure China is well aware and prepared to handle what is coming their way. Other countries are also preparing themselves for the worst and EU officials have held a secret meeting at Geneva where they planned response to US tariffs.

The base metals have been unpredictable but are clearly following range bound trade.


For Intraday initiate Long in Copper above 420.50 with target of 424 and SL of 418. Copper will see downtrend in evening session so initiating short around 417 can also turn out to be profitable.


Investors have been initiating bullish position for Nickel as there is is demand in different countries but mines are prepared for this demand. I would suggest a Long position in Nickel at 454 with target of 465 and SL of 445. You might need to hold this position for this week to make profit.


Aluminium is trading sideways and we can see it touching 135-137 in upcoming sessions. Alternatively, if it moves above 142, it might turn bullish and we may see 145-148 levels on MCX.
I would recommend a wait and watch strategy and buy on dips for small trades.


Zinc is another base metal which has been scraping bottoms. We could see a bounce back trade today or tomorrow in Zinc so I would suggest a buy call in Zinc.
Buy Zinc at 180 for target of 182-185 and SL of 177

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