AHMEDABAD (Commodity Online): Industrial metals plunged sharply in morning trades after news of a major a massive 8.9 magnitude earthquake that jolted Japan today.
World market fell on morning session pushing them a multi week decline, as investors and speculators in world market sold off metals from day high levels.
Japan's earthquake forced port closures and shutdowns of oil refineries and metal plants in the world's third-biggest economy, rattling commodity and energy markets as participants weighed up how quickly activity could return to normal.
This natural disaster could result in another sharp rise in risk aversion on markets and a continuation of yesterday's correction on commodity markets. The demand for oil could be lower, at least in the short term, because of the earthquake.
Such news feeds into the risk-negative week, also with political unrest in the Middle East and the slightly weak China import data for base metals. All of those factors have fed into sentiment towards red zone in metals commodities.
Industrial metals were already under pressure on worries about high oil prices, sparked by unrest in the Middle East, which may hurt the global economy.
Output of most industrial metals showed supportive growth in the first two months of the year. Refined copper output gained nearly 8 percent, semi-finished products and alloy output jumped 15.2 percent on the year.
The published data is quite strong, although there's concern that output growth could have outstripped demand expansion, which might cause some problems in the coming 2-3 months.
Technically on charts, Metals prices were overbought from beginning of the year 2011. Prices were expected to correct at least 15-18 percent in near term. Economical, geographical and natural calamities news helped to provide short term correction in metal price ahead this week.
Base metals prices may suffer in coming month due to such significant mix macro economy data from all over world. On another side, Precious metals are likely to extend gains as traders may start buying the commodity as a safe haven asset.
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