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MUMBAI Nov 23 Base metals demand in India could
slow next week, particularly for lead and copper, as sales of
cars taper off before picking up with new year registrations and
buying of fans and air conditioners dips as winter sets in.
India's automobile sales typically fall month-on-month in
December after a strong demand in November, when a clutch of
festivals prompts gift-giving, both large and small.
"Lead is mostly used for making batteries for cars, bikes
and trucks, and a decline in automobile sales will have a direct
impact on its demand," said an official from Hindustan Zinc Ltd
, India's only producer of primary lead.
Last year, sales of motorcycles and cars fell 7 percent in
December from the previous month, according to the Society of
Indian Automobile manufacturers.
An expected fall in demand for power back-up devices which
use batteries, as cold weather sets in during December and
reduces the need for air coolers, could also cut lead demand in
local markets, traders said.
Lead spot prices in India fell 0.49 percent to 140.7 rupees
a kg on Thursday from 141.4 rupees on Monday, their highest
level in the month and a rise of 7.4 percent since Nov. 1,
according to HZL's website.
HZL revises lead prices twice a week, on Monday and
At 1133 GMT, the November lead futures contract on
India's Multi-Commodity Exchange (MCX) was up 0.71 percent at
120.35 rupees a kg from the previous close on Thursday, tracking
firmness in overseas prices and in response to a weak rupee.
The partially convertible rupee, which plays an
important role in determining the prices of dollar-denominated
metals, fell on Friday to hit its lowest level against the
dollar in over two months.
Traders expect copper demand to decline next week as falling
temperatures with the beginning of the winter season could cut
demand for electrical appliances such as fans, fridges and
air-conditioners, particularly in northern India.
Copper in India is mostly used for making wire with a
capacity of less than 1,100 volts and electrical equipment.
The metal is also used for making artefacts and alloys like
brass, demand for which rises for the Diwali festival in
November, traders said.
On Friday, the key November copper contract on the
MCX was trading up 0.42 percent at 427.7 from Thursday's close,
buoyed by the weak rupee.
Three-month copper on the London Metal Exchange was
trading nearly flat at $7,708.5 per tonne from Thursday's close,
after reversing initial losses, on hopes of a recovery in the
In the Mumbai spot market, copper prices were unchanged at
425.45 rupees per kg from Thursday's close.
Zinc demand in India is likely to remain buoyant, despite
the projected decline in automobile sales, on use by the
construction sector, which has risen after the end of the June
to September rainy season.
"Construction activities are likely to grow further as the
government is pushing for infrastructure development in the
country. And it will boost demand for both steel and zinc," said
Metulbhai Dalal, a metal dealer based in Mumbai.
Zinc is mostly used as an anti-corrosive agent for
India, the world's third-largest producer of zinc, has a
capacity to produce around 1 million tonnes annually. HZL,
controlled by Vedanta Resources, accounts for around 82
percent of total production.
Zinc in the local spot market rose by 0.2 rupees to 104.9
rupees a kg from Thursday's close.
The November zinc contract was trading at 106.5
rupees a kg, up by 1.24 percent from Thursday's close.
(Additional reporting by Henry Foy; Editing by Anupama Dwivedi)