Positive Session Seen for Base Metals

NEW YORK (TheStreet) -- Base metals are expected to trade in the green Wednesday in the absence of any economic reports and a likely positive session for U.S. stock markets.

On Tuesday, the U.S. Department of Commerce's latest construction figures were a mixed bag. Housing starts for the month of June stood at 549,000, below market expectations of 580,000. However, building permits recorded a 2.1% increase to 586,000, topping market expectations for 575,000. Though there are no economic data releases lined up for the day, the market likely will pay close attention to Federal Reserve Chairman Ben Bernanke's testimony to the Senate.

Copper

Copper for delivery within three months was trading up 2.1% to $6,780 on the London Metal Exchange (LME). Copper inventories maintained by LME continued to decline and shed 3,250 tonnes to close at 419,600 tonnes Tuesday. Copper faces support at $6,616 and resistance at $6,783.

Meanwhile, Freeport-McMoRan Copper & Gold ( FCX) is due to report its second-quarter results on Wednesday. The company estimates sales volume of 830 million pounds of copper, 270,000 ounces of gold and 15 million pounds of molybdenum. Reuters forecasts earnings of $1.32 per share on revenue of $3.56 billion. Looking ahead, Freeport-McMoRan expects sales volumes to be higher in the second half of this year.

Major copper producers in the world are trading very close to their resistance levels. Southern Copper ( SCCO), which closed at $30.61 in the previous trading session, has support at $29.38, while resistance lies at $31.24. Meanwhile, Teck Resources ( TCK) closed at $32.78 with support and resistance at $31.49 and $33.52, respectively.

Aluminum

Aluminum for delivery within three months traded 0.7% higher at $1,985 per ton in the early hours of trading at the LME. Support and resistance stands at $1,980 and $1,992, respectively. On Tuesday, LME inventories added 48,275 tonnes, resulting in stockpiles of 4.42 million tonnes, the highest level since July 1.

According to the International Aluminum Institute, the global daily average of primary aluminum output decreased to 66,000 tonnes in June from 66,400 tons in May. Besides, the Brazilian Aluminum Producers Association revealed that the country's primary aluminum production was up 0.8% year over year to 126,600 metric tons during June 2010. However, during the first half of the year, output was down 1.1% year over year to 769,600.

Alcoa ( AA) ended trading at $10.85, close to its resistance of $11.04 after which the next technical target would be $11.23. Its support lies at $10.49. Century Aluminum ( CENX) closed at $9.52 with support and resistance at $8.97 and $9.80, respectively. Kaiser Aluminum ( KALU) closed at $39.05 with support at $37.41 and resistance at $39.94.

Nickel

Nickel for delivery within three months gained 0.3% to $19,174 per ton in early hours of trading on LME. Nickel inventories maintained by the LME shed 330 tonnes to settle at 118,206 tonnes Tuesday. Nickel faces support at $19,125, while resistance lies at $19,200.

BHP Billiton's ( BHP) nickel production stood at 173,400 tonnes during the first half, the company revealed in its latest production report. During the quarter ended June 2010, production increased 6% sequentially and 12% year over year. The primary driver was a major furnace rebuild at Nickel West.

Zinc

Zinc for delivery within three months edged down 0.5% to $1,866 per ton in the early hours of trading on the LME. Zinc stockpiles accumulated 1,425 tonnes to close at 618,925 tonnes. Zinc has support at $1,859 and resistance at $1,878.

Australia-based junior explorer Rox Resources is seeking to develop its Myrtle zinc deposit by allowing a Rio Tinto ( RTP) subsidiary, North Limited, to acquire a stake in the company through the issuance of 20 million ordinary Rox shares instead of a lump sum cash payment of $1 per tonne of zinc.

Lead

Lead dipped 1.1% to $1,819 per ton in early hours of trading on the LME. At the end of trading Tuesday, lead inventories fell by 1,000 tonnes to 185,775 tonnes. Lead faces support at $1,811 and resistance at $1,836.

Karvy Global Services (www.karvyglobal.com), a subsidiary of the Karvy group (www.karvy.com), provides specialized research in asset classes including stocks, mutual funds and insurance to leading Wall Street firms.

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