What's Moving the Market?
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20be-Se-te
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It was another gloomy start to proceedings for the London Metal Exchange base
metals complex Friday. Copper and aluminium took the brunt of the pain,
weighing on the rest of the complex. One London-based trader told Platts: "I
think that copper has been overvalued for a long time," adding: "The outlook
hasn't changed, things are bad out there. The economy is in dire straits and
the metals are feeling the heat from the dollar." Three-month copper was
indicated at $7,030/oz, $196 down from Thursday's kerb, at 0930 GMT. "Copper
has historically drifted lower in the last quarter, this is nothing new.
Stocks tend to go up towards the end of the year," said the trader. A copper
trader recently told Platts that he cannot see the market picking up this
year: "Last year we were in contango, why not again this year? Business has
gone in to hibernation." The first trader said he couldn't disagree with this:
"I think a lot of people already have their positions sorted for 2008."
Copper stocks increased a whopping 18,775 mt Friday taking the total in LME
registered warehouses to 200,875 mt, with 10,575 canceled warrants in place.
The first trader said that, "it all depends on tonight's finish. Seeing as
copper has been so overvalued it is moving much more then the rest. If we
can't hold around $7,100 then we could head towards $6,600, and then who
knows?" Aluminium was also on the back foot, down $12 at $2,655/mt. William
Adams, an analyst with Basemetals.com, said in a note: "With further weakness
seen overnight it looks like all the metals are set to test support with
aluminium and copper looking the most vulnerable." He added: "Needless to say
the weaker closes in most of the metals has damaged the charts, with most of
the metals looking vulnerable again. The main exceptions being tin and zinc,
indeed the fact that zinc held in positive territory does show relative
strength." Still, zinc was down $43 at $1,769/mt.
Tin was also off $750 at $18,650/mt while nickel eased $450 to $18,755/mt.
Standard Bank said, on a bullish note: "The recent advance has given back some
ground, but we maintain the view that the bear trend has ended, and nickel is
establishing a support base -- trading from the long side is the recommended
strategy." The South African bank added: "The long-term bull trend prevails
and, if nickel recovers back above the $26,000 to $28,000 area, expect a
gradual move to the $34,100 to $34,700 resistance zone." Lead, the heavy
metal, also sank in premarket business, down $69 at $1,822/mt. North American
alloy dipped $20 to $2,390/mt while standard was untraded. Adams concluded:
"All in all, the outlook is gloomy and as a result it is not surprising most
of the metals are still firmly in consolidation mode, however, aluminium has
been extending its down trend and copper may well be set to follow. If it does
then it may well drag the others down too."
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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