What's Moving the Market?
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20er-No-em
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The London Metal Exchange made some modest gains in early trade in London
Friday, still the overall theme remained one of doom and gloom for one trader
contacted by Platts. "The markets are still doom and gloom. Regarding the
aluminium stock that continues to pour into warehouses, it is part of the
unwinding of finance trades -- where the financing is not able to be done," he
said. Aluminium stocks continued to increase Friday with 2,025 mt landing in
LME registered warehouses, taking the total to 1,711,675 mt. "The outright
price movement in ally is largely due to unwinding of long hedge fund
positions, while the industrial outlook remains very poor. There have been
many production cutbacks announced in last three weeks," said the trader
working for an LME ring dealer, "in normal circumstances that would be bullish
and cause the price to rally -- but normal circumstances imply we are trading
in a market environment that is close to balance," he added.
Three-month aluminium was seen on LMEselect in premarket business up $22 at
$1,807/mt, by 1030 GMT Friday morning. It wasn't the only metal seeing stock
additions into LME registered warehouses. Fellow bellwether copper was also
plumping, with stock in warehouse up 1,500 mt at 280,050 mt. "The analysts who
look at the fundamentals and try and add it all up to give a price are usually
wrong anyway, and in today's environment it is a pointless exercise. I think
the only sensible call you can make on outright prices is that ultimately they
all going to return to their levels pre-2005," said the trader. He added:
"However, for today, we must watch the stock markets, the Dow Jones namely,
that will lead the way -- if it goes up so will metals, as short covering
kicks in -- and it could be quite violent with sharp spikes of $500 in copper
and ally hitting $4,100 cannot be ruled out." Three-month copper was seen up
$40 at $3,520/mt in premarket trade.
On a more bullish note, global demand for base metals used in industries such
as construction and engineering is likely to remain fairly resilient ... as
prices continue to fall back from recent record highs, according to the latest
Metals and Non-metallic Minerals Review from Lloyds TSB Corporate Markets. The
report, compiled by Chief Economist, Trevor Williams, analyzes the global
outlook for the metals and non-metallic minerals sectors. Lead shrugged off
that sinking feeling to hit $1,201/mt, up $17, while nickel was up $275 at
$10,225/mt. Williams said: "Global demand for base metals is likely to remain
fairly resilient over the medium term as emerging market economies continue
along their path of economic development, despite the current turmoil." Tin,
once the darling of the market on supply concerns, dipped $305 to go to
$11,600/mt, while zinc managed to increase $25 at $1,205/mt. Standard alloy
was flat at $1,360/mt while North American was untraded.
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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