Base metals on LME ended largely lower on Wednesday. All industrial metals barring lead ended lower yesterday. Nickel and aluminum fell the most with a decline of over 1%.
Industrial metals witnessed sharp gains in last few days however the rally has lost momentum and we are seeing some long liquidation.
The correction has been triggered by gains in US dollar. The US dollar index recovered from Sept.2017 lows supported by upbeat economic data and Fed's support for gradual rate hikes.
However, supporting industrial metals is upbeat US and Chinese economic data and firmness in equity market.
US ISM manufacturing index for December stood at 59.7 as against forecast of 58. Construction spending rose 0.8% in November as against forecast of 0.7% growth. Caixin services PMI for December stood at 53.9 as against forecast of 51.8.
US equity market hit fresh record high levels yesterday. Asian equity markets are trading higher today.
Aluminum fell for the third consecutive session amid some profit taking after recent rally to the highest level since 2012. Copper has also retreated from 4-year high while zinc has corrected from decade high. Lead has outperformed supported by severe cold weather in US which has increased prospect for replacement demand for batteries.