LME Review: Prices End Up As Stocks Fall; Doubts On Tin Supply
LONDON (Dow Jones)--Industrial metals traded in London ended the week higher Friday as stockpiles shrunk and concerns mounted over the supply of tin from key providers, though traders predict light volumes through next week as the price outlook remains clouded.
London Metal Exchange base metals prices climbed alongside rising oil and precious metals prices Friday: "What we have seen is a general move higher across the board in commodities," London-based metals analyst Nick Moore of ABN Amro said.
Three-month copper and lead prices finished near their highs for the week, triggered by a drawdown in inventories Friday.
Copper inventories dropped by 100 metric tons to 215,625 tons while lead stocks declined by 1,000 tons to 36,625 tons.
"Copper's price climb set the tone for the entire complex" and the other base metals followed, Moore said.
Still, the strength was due to traders covering their short positions rather than the beginnings of a sustained rally, he added.
With the exception of aluminum, trading volumes have been light this week, another base metals analyst said: "Many market participants sidelined this week due to the recent volatility will wait until they get a better sense of market direction before jumping back into the market," the analyst said.
In other metals, three-month tin prices climbed nearly 2% in the afternoon kerb to $12,325/ton from Thursday boosted by a combination of strong consumption, declining stocks, and uncertainty over tin supplies.
Tin stocks fell 130 tons to 10,480 tons Friday, according to LME data.
A Glencore spokesperson told Dow Jones Newswires Friday that the company hadn't been contacted by the Bolivian government regarding apparent re-nationalization plans.
Bolivian President Evo Morales said Thursday he would nationalize a mineral processing plant owned by the Swiss miner and trading house, a first step in his plans to give the Bolivian state a larger share of the country's mineral wealth.
Thursday's announcement marks a dramatic move in Morales' plans to nationalize Bolivia's mining industry though how the process will unfold is unclear.
Similarly, uncertainty plagues the future of Indonesia's tin mining operations after a recent shutdown of private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
The South Asian country produces around a third of the 360,000 tons of global annual tin output.
Elsewhere, a European Union proposal to halve the aluminum import duty was blocked from progressing to the next stage Friday. No concrete plans have been made regarding the future of the proposal.
Spot gold neared a seven-month high Friday while silver hit a two-month high. (Prices in dollar a metric ton)
3 Months Metal Bid-Ask Change from
Thursday PM kerb
Copper 5580.0-5585.0 Up 165
Lead 1610.0-1620.0 Up 36
Zinc 3120.0-3130.0 Up 5
Aluminum 2699.0-2700.0 Up 11
Nickel 36100.0-36150.0 Up 650
Tin 12325.0-12330.0 Up 175
Aluminum Alloy 2200.0-2210.0 Up 10
Aluminum Alloy 2130.0-2140.0 Up 30
Friday, February 09, 2007
Metals
LME PM Kerb Close - Feb 9
3 Months
Metal Bid Ask
Copper 5580.0 5585.0
Lead 1610.0 1620.0
Zinc 3120.0 3130.0
Aluminum 2699.0 2700.0
Nickel 36100.0 36150.0
Tin 12325.0 12330.0
Aluminum Alloy 2200.0 2210.0
Aluminum Alloy-NASAAC 2130.0 2140.0
3 Months
Metal Bid Ask
Copper 5580.0 5585.0
Lead 1610.0 1620.0
Zinc 3120.0 3130.0
Aluminum 2699.0 2700.0
Nickel 36100.0 36150.0
Tin 12325.0 12330.0
Aluminum Alloy 2200.0 2210.0
Aluminum Alloy-NASAAC 2130.0 2140.0
Oil
Oil prices rise above $60 a barrelNEW YORK (AFX) - Oil prices climbed above $60 a barrel Friday for the first time since the first trading day of this year, due to growing tension between Iran and the United States, violence in Nigeria and frigid U.S. temperatures.Light, sweet crude for March delivery rose 31 cents to $60.02 a barrel by midday trading on the New York Mercantile Exchange, after rising as high as $60.42.Prices have been flirting with the $60-a-barrel level all week, and finally surpassed it Friday."After two or three failures, and then getting above it, that's important in determining market direction," said Jim Ritterbusch. He said, though, it's too soon to say whether the market is firmly entrenched in an uptrend, especially with the end of winter heating fuel demand on the horizon: "It just looks like we've got another week or two of strength."Oil prices have risen steadily over the last two weeks on news of bitter winter weather in the U.S., the world's biggest oil consumer. On Thursday, the contract jumped $2 to settle at $59.71 a barrel -- the highest settlement since Dec. 29.Before Friday, crude oil had not traded above $60 a barrel on the Nymex since Jan. 3, the first trading day of the year."It seems traders are looking at the short-term -- heating oil demand and geopolitical tensions -- when they should be looking at the medium and long-term," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo."We have to remember that the geopolitical risks, especially in relation to Iran, have not really been realized in terms of affecting supply, and that the winter season will be over in a month," Emori said.The Brent crude contract for March rose 2 cents to $59.05 a barrel on the London ICE Futures exchange.On Thursday, Iran stepped up its warnings to the United States, which rekindled worries that supplies out of the oil producer could be hindered. Iranian supreme leader, Ayatollah Ali Khamenei, said Tehran would strike U.S. interests around the world if his country is attacked.Analysts said the comments kept prices from falling, as did ongoing forecasts of cold weather throughout the United States, and news of a shutdown at an Occidental Petroleum Corp. crude and natural gas field in California.The market was also watching violence in Nigeria, where a Frenchman was kidnapped Thursday in the latest of a spate of violence targeting oil workers.More than 100 foreigners have been seized in a year of stepped-up attacks across Nigeria's southern region, where the crude is pumped. More than 40 have been seized in the past month alone. The violence in Africa's biggest oil producer has cut daily output by nearly a quarter.In other Nymex trading, natural gas slipped less than a cent to $7.865 per 1,000 cubic feet. A day before, it settled at $7.871, its highest settlement price of the year. Natural gas, the more popular form of home heating in the United States, has risen more than 60 percent over the past month on the recent cold weather. It is trading around the same level it was this time last year.The National Oceanic and Atmospheric Administration continues to forecast normal to below-normal temperatures across the United States until at least Feb. 22.In other Nymex trading Friday, heating oil futures rose less than a cent to $1.7303 a gallon, while gasoline futures rose 2.1 cent to $1.6143 a gallon.Retail gasoline prices have been rising along with crude prices over the past two weeks. The average U.S. price of a gallon of regular was $2.205 on Friday, up from $2.197 on Thursday and January's low of about $2.16.
Base metals
1526 GMT [Dow Jones] LME base metals find good momentum on technical buying and recover from earlier lows, says an analyst. Adds no major news for the push higher but trading volumes are light, except in the aluminum market, as market participants remain sidelined. A drawdown in copper stocks by 100 metric tons to 215,625 tons Friday also added to copper price strength, says Barclays Capital. Copper trades at $5,560/ton, up nearly 3% from Thursday while lead trades at $1,620/ton, up nearly 3% from Thursday. (LYT)
Red Kite Hedge fund
DJ MARKET TALK: Red Kite Buys Time From Immediate Redemptions
1346 GMT [Dow Jones]The extended period of withdrawal notice for investors in Red Kite doesn't necessarily mean the US hedge fund "is out of the woods yet, but it certainly gives its managers more breathing room as opposed to being under the gun of immediate redemptions," says Man Financial's Ed Meir. The fate of the fund will be tied to the markets going forward, he notes. "If, as it is widely believed, the fund is mostly long, then the more stability metal prices exhibit from here on in, the less inclined investors will be to head for the exits," he adds. (ADH)
1346 GMT [Dow Jones]The extended period of withdrawal notice for investors in Red Kite doesn't necessarily mean the US hedge fund "is out of the woods yet, but it certainly gives its managers more breathing room as opposed to being under the gun of immediate redemptions," says Man Financial's Ed Meir. The fate of the fund will be tied to the markets going forward, he notes. "If, as it is widely believed, the fund is mostly long, then the more stability metal prices exhibit from here on in, the less inclined investors will be to head for the exits," he adds. (ADH)
Copper
DJ MARKET TALK: Copper Bulls Unjustified,China Demand Nr-Term
0944 GMT [Dow Jones] An upturn in demand for copper ahead of the Chinese new year is adding unjustified bullish sentiment to global price prospects, a London broker says. "There's traditionally an upturn in demand at this time of year but it tails off immediately the holidays start," the he notes. Rising imports of copper and increased smelter production will dampen sentiment further as the year progresses, he adds. LME copper trades last at $5,433 a metric ton, up 3% from $5,250/ton Thursday.
0944 GMT [Dow Jones] An upturn in demand for copper ahead of the Chinese new year is adding unjustified bullish sentiment to global price prospects, a London broker says. "There's traditionally an upturn in demand at this time of year but it tails off immediately the holidays start," the he notes. Rising imports of copper and increased smelter production will dampen sentiment further as the year progresses, he adds. LME copper trades last at $5,433 a metric ton, up 3% from $5,250/ton Thursday.
Oil
Oil had traded over 60 briefly this morning..Has now backed off to 59.70. Will be interesting to see if it can establish a foothold over 60 in this afternoons session. Risk is that it fails again to hold at 60 and sells off. I think this is still reflected in the oil sector share prices. The sector is still wary of this 10 dollar move ( share prices have't pushed that much higher on it) in the last few weeks and may regard it as short term speculation on the back of some cold weather. I'm still looking at buying dips in the sector when oil pulls back. Would be wary of chasing the market at higher toppy levels when oil is so volatile and the outlook isn't that solid. Better play safe. You may not attend all the weddings but you won't attend all the funerals aswell.
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