Major base metals futures mainly copper, zinc, lead and nickel on the MCX, a national commodity exchange, tumbled by over 3% on Monday, as majority traders dumped their positions for safe assets following the event of US investment bank Lehman Brothers having filed for bankruptcy and the suspension of trading on the London Metals Exchange (LME) platform.
The US investment bank giant, which filed for bankruptcy earlier on Monday, would still be able to trade base metals on the LME via telephone.
The exchange has suspended Lehman Brothers from trading on its electronic platform-select and declared it a defaulter under LME rules, an exchange said.
On the MCX platform, zinc, nickel and lead futures (immediate month contracts) prices dropped by over 5% to trade at Rs 80.85 per kg, Rs 843.60 per kg and Rs 83.90 per kg respectively on Monday till 5 pm.
Copper and aluminum futures fell by nearly 3% to settle at Rs 313.35 per kg and Rs 117.15 per kg, respectively over the previous trading day.
?Traders are more worried about the current financial turmoil and the market sentiment is negative. However, the market will come back to normalcy in two-three days? time,? an analyst with a leading commodity broking house said.
?Industrial metals have already been under pressure this year from a lack of demand from China, rising inventories and worries about the health of the global economy,? the analyst added .
Traders did not expect a massive impact from the unwinding of Lehman’s positions as the bank was a recent player in the base metals market.
On the LME platform, nickel (cash) and zinc (cash) fell sharply by nearly 5% on Monday to trade at $17,890 per tonne and $1,715 per tonne, while copper (cash) and aluminum (cash) prices also fell by nearly 3% to trade at $6,878 a tonne and $2,517 a tonne over the previous trading day.