What's Moving the Market?
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20 2-Ma- 9
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The base metal complex was mostly indicated lower in London Metal Exchange
premarket trade Friday, with strong commodity trade advisor liquidation seen
on aluminium, copper and nickel, a trader with an LME ring dealer said. He
said there had been a large increase in copper stocks registered on Friday
morning, up 11,150 mt to headline at 121,275 mt. "There have been good volumes
through the system on copper this morning, around 2,600 lots already," he
said, adding that over the last few days copper's moves had largely been
dollar-related. "The dollar has strengthened so we should see the metals
softening a little on the back of that," he said, adding that it would be
interesting to see where the complex finished at the close of trade Friday.
"Copper has found good support at $8,200/mt and aluminium at $2,860/mt, so
we'll see if they are able to hold those levels," he said. Three-months copper
was bid at $8,210/mt at 0850 GMT Friday, down $90 from its previous close.
Fairfax Investment said in a report Friday that copper prices were slipping
over concerns over demand and rising inventories in official warehouses. "US
demand is falling due to weaker housing market, and could fall more sharply if
commercial construction falls off," it said, adding that if copper prices fell
substantially, Fairfax would expect to see renewed buying interest from China
supporting prices, as stocks were rebuilt. Meanwhile, aluminium was indicated
at $2,885/mt on Friday morning, up $10 from its previous close. The trader
said tin seemed to have a "mind of its own" and had been "running away from
the rest of the complex." Tin was bid at $24,431/mt at 0850 GMT, down $19 from
its previous close. During premarket trade on Thursday tin had rallied $500 on
the back of a hefty increase in cancelled warrants, surging up to around its
all-time high level of $24,600/mt. Tin stocks headlined at 7,565 mt Friday
down 20 mt, while cancelled warrants were at 940 mt.
The trader noted that lead had seen a rather large selloff over the last few
days. Lead was bid at $2,311/mt, down $9 from its previous close, while nickel
pulled back $830 to $26,870/mt. Zinc, meanwhile, was bid at $2,215/mt at 0850
GMT, off $3 from its previous close. North American alloy was bid at $2,650/mt
off $30 from its previous close, while there were no bids available for
aluminium alloy. Basemetals.com analyst William Adams said in a report Friday
that overall he remained bullish for copper and to a lot lesser extent zinc,
"but feel the others are ready to move into bear markets, although we thought
they would be propped up by copper." However, Adams said lead's recent action
suggested that the other base metals might be able go it alone -- "time will
tell."
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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