Reuters reported that demand for base metals in India could rise next week, particularly for copper and zinc, helped by a surge in construction activity and on higher buying of geysers and other heating equipment as winter sets in.
Traders said that a sharp rise in global base metal prices on hopes of an improvement in the global economy has pushed up the prices of base metals on local bourses, though a stronger rupee has capped gains.
The partially convertible rupee which plays an important role in determining the prices of dollar denominated metals extended gains. It rose to its highest level against the dollar in over 2 months on Thursday.
Traders expect copper demand to rise next week as sales of heating appliances such as geysers, particularly in northern India are likely to rise with the winter setting in.
Mr Metulbhai Dalal a copper dealer in Mumbai said that "As winter in northern India progresses, it will boost demand for geysers and other heating equipment and it could compensate for the decline in sales of air conditioners. A pick up in construction activity due to better availability of labor after the end of the harvesting season could also push up copper demand this week."
Three month copper on the London Metal Exchange was trading up 0.77% at USD 7,960 per tonne from Thursday's close. The contract touched 5 week high earlier in the day on hopes of a recovery in the global economy and improvement in demand from China, the world's largest consumer of copper. In the Mumbai spot market, copper rose INR 3.85 to INR 436.7 per kilogram from Thursday's close. Zinc demand in India is likely to remain buoyant, as it is used widely in the construction sector as an anti corrosive agent.
Mr Arvind Singh metal dealer based in Ghaziabad near Delhi said that "As construction and other economic activities are gaining pace in the country, demand for copper and zinc is likely to remain high. India, the world's third largest producer of zinc has the capacity to produce around 1 million tonnes annually. Hindustan Zinc Limited controlled by Vedanta Resources accounts for around 82% of the total production."
