What's Moving the Market?
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205,-Ju-y
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The London Metal Exchange base metal complex edged slightly higher in
premarket business Friday. Still, one trader told Platts that he expects the
market to "drift lower" as investors "reduce their positions during the summer
lull." Copper remained below the psychologically important $8,000/mt level yet
still made a slight gain over Thursday's close price, up $56 at $7,956/mt at
0930 GMT on a three-month basis. Investment bank Fairfax said in a note to
clients that copper prices are on the backfoot as the Chinese stay away from
the market. An analyst told Platts previously that above $8,000/mt and the
"Chinese are just not interested." Copper managed to race to a record high
recently of $8,940/mt. "Miners like BHP and Codelco may use the slowdown to
revamp, maintain and repair equipment and assets which have been hugely
stretched in recent years," said Fairfax. Looking at fellow bellwether
aluminium, the trader said that the metal is holding around $2,950/oz.
"We have seen some solid CTA selling in aluminium this morning and an equal
amount of consumer buying, it's a funny one," the trader said. Aluminum was
indicated up $11 at $2,962/mt. Standard Bank said: "Of note, is that aluminium
has now given back the gains it made in June following news of power-related
production cuts in China." Fairfax said on a more bullish note for aluminium,
"China's top 20 aluminium smelters have pledged to cut power demand by 10% in
an attempt to secure power supply. China's power crisis looms as there are
shortages of coal and low water levels at hydropower dams." Lead had that
sinking feeling slipping $24 to $2,146/mt having closed Thursday at $2,170/mt.
Nickel remained out of favor with investors, although up $21 in premarket
business, the metal was still suffering seen at $18,821/mt on a three-month
basis. Michael Jansen, an analyst at JPMorgan, said in a note to clients:
"Nickel is still in the doldrums."
"This reflects the still poor level of demand from the stainless sector in
Europe and the USA, while Chinese mills, having posted a solid production
performance in the first quarter, are now lagging, with export demand weak and
internal inventories of stainless having accumulated significantly," said
Jansen. He added: "In addition stainless buyers globally seem to continue to
have a poor outlook on nickel and are looking to buy the "all-in" price of
stainless at lower levels." Tin remained firm Friday, up $60 at $22,410/mt.
The metal has been buoyed for the past months by continuing supply concerns
born from Indonesia and China. Zinc also managed some gains, up $14.50 at
$1,874.50/mt. The trader said: It's pretty crazy. I think people are going to
start reducing positions so that they limit exposure over the summer months."
Standard alloy was indicated down $10 at $2,550/mt in early business while
fellow alloy, North American, received no investor attention.
This commentary was first published in Platts Metals Alert. If you have any feedback about this commentary or want to find out more about Platts Metals products and services, please contact webeditor@platts.com.
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| This content first appears in Platts Metals
Alert. Platts Metals Alert is the metal industry's leading real-time data feed service. It provides continuous breaking Metals news from the editors of Platts Metals Week, a long-term global team of metals specialists dedicated exclusively to metals reporting, 24-hours-a-day. |
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