Wednesday, February 14, 2007
Zinc
LME zinc jumps as a "fat-fingered" erroneous trade by one participant triggers stops and pushes the market above $3,300/ton, says a broker. Three-month zinc touches $3,379/ton, likely $100/ton higher than intended, the broker notes, and then slips immediately lower. "Brokers are temporarily confused as to where zinc's trading, and it's making the market volatile," the broker adds. LME zinc trades last at $3,305/ton, up 4% from overnight levels. (ADH)
LME REVIEW
LONDON (Dow Jones)--London Metal Exchange nickel took center stage Wednesday rising nearly 5% driven by falling inventories, but analysts say they will keep a close watch on whether Asia succumbs to major bouts of profit-taking.
Three-month nickel reached a more than one-week-old high at $37,800 a metric ton Wednesday triggered by an increase in canceled warrants and falling stock levels, said Michael Skinner of Standard Bank in London.
Canceled warrants - or material accounted for and to be drawn down at a later date - soared to 54% Wednesday from Tuesday's 15%, leaving just 1,806 tons available to the market. This is less than half a day's worth of global nickel consumption.
An owner of metal in LME warehouses holds a warrant. Some traders suggest that nickel warrants are tightly held by one particular market participant. This player can move its metal on and off warrant in warehouses and have some control over nickel stocks - and prices - as a result.
Profit-taking at the top of the price ranges is to be expected, said Skinner, but "we haven't seen as much selling overnight in Asia" and will have to see whether this continues.
Meanwhile, three-month aluminum prices rose roughly 1% to a PM kerb of $2,828/ton on technical buying as political uncertainty in Guinea continued.
Guinea is a leading producer of bauxite, an essential component in producing aluminum.
Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of violent protests. The demonstrations were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
However, an increase in aluminum stocks by 2,925 tons to 759,050 tons Wednesday capped gains. Aluminum inventories have climbed roughly 9% since the start of 2007.
In other metals, three-month copper traded down 0.5% to a PM kerb of $5,720/ton driven by a large increase in copper stocks by 1,650 tons Wednesday to 214,900 tons. Copper inventories have increased roughly 11% since the start of 2007.
Oil price weakness as well as easing strength in the euro added to copper price pressure.
Three-month zinc suddenly jumped in afternoon trade due to an erroneous trade by one participant, triggering stops and pushing prices sharply higher, according to one LME broker. Zinc rose roughly 2% to a PM kerb of $3,310/ton from Tuesday.
Earlier Wednesday, three-month tin prices hit a new record high of $12,800/ton before retreating modestly to a PM kerb of $12,695/ton.
"The main driver for prices continues to be uncertainty on the supply side stemming from Indonesia's Bangka island," said Kevin Norrish of Barclays Capital.
Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Earlier this week, PT Koba Tin declared force majeure to its tin customers on shipments and deliveries of the metal.
Meanwhile, Switzerland's Glencore International AG Tuesday demanded compensation from Bolivia's government for nationalizing a tin smelter as part of President Evo Morales declared ambition to gain greater control of the country's mineral wealth and refineries. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Tuesday PM kerb
Copper 5720.0-5725.0 Dn 29
Lead 1700.0-1705.0 Up 30
Zinc 3310.0-3315.0 Up 90
Aluminum 2828.0-2830.0 Up 8
Nickel 37475.0-37500.0 Up 1475
Tin 12695.0-12700.0 Up 100
Aluminum Alloy 2240.0-2250.0 Dn 10
Aluminum Alloy 2220.0-2230.0 Dn 40
Three-month nickel reached a more than one-week-old high at $37,800 a metric ton Wednesday triggered by an increase in canceled warrants and falling stock levels, said Michael Skinner of Standard Bank in London.
Canceled warrants - or material accounted for and to be drawn down at a later date - soared to 54% Wednesday from Tuesday's 15%, leaving just 1,806 tons available to the market. This is less than half a day's worth of global nickel consumption.
An owner of metal in LME warehouses holds a warrant. Some traders suggest that nickel warrants are tightly held by one particular market participant. This player can move its metal on and off warrant in warehouses and have some control over nickel stocks - and prices - as a result.
Profit-taking at the top of the price ranges is to be expected, said Skinner, but "we haven't seen as much selling overnight in Asia" and will have to see whether this continues.
Meanwhile, three-month aluminum prices rose roughly 1% to a PM kerb of $2,828/ton on technical buying as political uncertainty in Guinea continued.
Guinea is a leading producer of bauxite, an essential component in producing aluminum.
Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of violent protests. The demonstrations were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
However, an increase in aluminum stocks by 2,925 tons to 759,050 tons Wednesday capped gains. Aluminum inventories have climbed roughly 9% since the start of 2007.
In other metals, three-month copper traded down 0.5% to a PM kerb of $5,720/ton driven by a large increase in copper stocks by 1,650 tons Wednesday to 214,900 tons. Copper inventories have increased roughly 11% since the start of 2007.
Oil price weakness as well as easing strength in the euro added to copper price pressure.
Three-month zinc suddenly jumped in afternoon trade due to an erroneous trade by one participant, triggering stops and pushing prices sharply higher, according to one LME broker. Zinc rose roughly 2% to a PM kerb of $3,310/ton from Tuesday.
Earlier Wednesday, three-month tin prices hit a new record high of $12,800/ton before retreating modestly to a PM kerb of $12,695/ton.
"The main driver for prices continues to be uncertainty on the supply side stemming from Indonesia's Bangka island," said Kevin Norrish of Barclays Capital.
Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Earlier this week, PT Koba Tin declared force majeure to its tin customers on shipments and deliveries of the metal.
Meanwhile, Switzerland's Glencore International AG Tuesday demanded compensation from Bolivia's government for nationalizing a tin smelter as part of President Evo Morales declared ambition to gain greater control of the country's mineral wealth and refineries. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Tuesday PM kerb
Copper 5720.0-5725.0 Dn 29
Lead 1700.0-1705.0 Up 30
Zinc 3310.0-3315.0 Up 90
Aluminum 2828.0-2830.0 Up 8
Nickel 37475.0-37500.0 Up 1475
Tin 12695.0-12700.0 Up 100
Aluminum Alloy 2240.0-2250.0 Dn 10
Aluminum Alloy 2220.0-2230.0 Dn 40
Merrills on commodities
Investors should reassess negative stance on commodities - MerrillLONDON (AFX) - Investors appear to have "fallen out of love with commodities" although recent more positive views on global growth prospects suggests they would be wise to reassess their stance on the sector, said Merrill Lynch.In its monthly Survey of Fund Managers, Merrill said a growing number of investors are starting to believe the global economy could remain stronger for longer."For the past two years, survey participants have described the global economy as being between its mid-cycle and late-cycle phases. However, investors appear to have begun to recalibrate their positions," said the bank. It added that with the majority now saying the global economy is back in a mid-cycle phase, they would do well to consider what impact continued global growth will have on commodity prices."Portfolio managers would be wise to reassess a bearish stance on the sector, with oil prices set to rise steadily and soft commodities starting to be impacted by the early stages of a bio-fuels-led boom," said Francisco Blanch, head of the bank's commodities research in London.In December last year, Merrill lowered its 2007 average oil price forecast to 60 usd a barrel, saying it expected supply growth from non-OPEC producers would expand significantly against a backdrop of falling oil demand.However, it also raised its 2008 average oil price forecast."We were bearish on oil at the start of the year because of ample stocks. But now we're starting to asses demand and we think the market will tighten up. For next year we think oil will be higher," said Blanch.Yesterday, oil prices surged above 59 usd a barrel after the International Energy Agency upped its forecast for global oil demand this year, citing continued stellar demand growth from China."Its an underlying demand growth story. Chinese growth is phenomenal," said Blanch. He added that while he still believes supply in the first half of the year will rise, boosted by non-OPEC production, he thinks strong underlying demand will keep oil prices on an upward trend.
Metals @ midday
LONDON (Dow Jones)-- London Metal Exchange nickel soared Wednesday morning on critically low supplies and bullish technical support, with traders expecting further upside across many of the base metals in the near-term.
The base metals are well supported due to light follow-through buying from Tuesday and a lack of major selling overnight in Asia, said an LME trader.
"The fact that prices have not come off indicate that the market is steadier than previously thought," the trader said.
Three-month nickel traded at $37,400 a metric ton at 1100 GMT, up nearly 4% from Tuesday. Despite an increase in nickel stocks by 156 tons to 3,924 tons Wednesday, stocks remain at critically low levels, the trader noted.
A jump in canceled warrants to 54% from Tuesday's 15% leaves just 1,806 tons available to the market - less than half a day's global consumption.
The large hike in canceled warrants in Busan and Singapore is largely Russian material and reflects market difficulties in sourcing material, a broker said.
Earlier Wednesday, three-month tin prices hit a new record high of $12,800/ton as uncertainty over key producers Indonesia and Bolivia continues. At 1100 GMT, tin traded at $12,750/ton, up over 1% from Tuesday.
"The sky's the limit for tin prices, especially when the market's so thinly traded and vulnerable to the speculative funds," said a broker.
Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Earlier this week, PT Koba Tin declared force majeure to its tin customers on shipments and deliveries of the metal.
Meanwhile, Switzerland's Glencore International AG Tuesday demanded compensation from Bolivia's government for nationalizing a tin smelter as part of President Evo Morales declared ambition to win greater control of the country's mineral wealth and refineries.
Elsewhere on the LME, three-month aluminum traded at $2,839/ton at 1100 GMT, up 0.7% from Tuesday on technical buying as political uncertainty in Guinea continues.
Guinea is a leading producer of bauxite, which is an essential component used to produce aluminum.
Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of deadly protests. The protests were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
A jump in copper stocks by 1,650 tons to 214,900 tons Wednesday capped earlier gains in copper prices. Stocks have increased by roughly 11% from the start of the year. At 1100 GMT, three-month copper traded at $5,725/ton, down 0.4% from Tuesday.
At the same time, lead traded at $1,700/ton, up roughly 1.5% from Tuesday as lead stocks declined by 875 tons to 35,000 tons Wednesday. LME lead stocks have fallen roughly 18% since the start of the year.
The base metals are well supported due to light follow-through buying from Tuesday and a lack of major selling overnight in Asia, said an LME trader.
"The fact that prices have not come off indicate that the market is steadier than previously thought," the trader said.
Three-month nickel traded at $37,400 a metric ton at 1100 GMT, up nearly 4% from Tuesday. Despite an increase in nickel stocks by 156 tons to 3,924 tons Wednesday, stocks remain at critically low levels, the trader noted.
A jump in canceled warrants to 54% from Tuesday's 15% leaves just 1,806 tons available to the market - less than half a day's global consumption.
The large hike in canceled warrants in Busan and Singapore is largely Russian material and reflects market difficulties in sourcing material, a broker said.
Earlier Wednesday, three-month tin prices hit a new record high of $12,800/ton as uncertainty over key producers Indonesia and Bolivia continues. At 1100 GMT, tin traded at $12,750/ton, up over 1% from Tuesday.
"The sky's the limit for tin prices, especially when the market's so thinly traded and vulnerable to the speculative funds," said a broker.
Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Earlier this week, PT Koba Tin declared force majeure to its tin customers on shipments and deliveries of the metal.
Meanwhile, Switzerland's Glencore International AG Tuesday demanded compensation from Bolivia's government for nationalizing a tin smelter as part of President Evo Morales declared ambition to win greater control of the country's mineral wealth and refineries.
Elsewhere on the LME, three-month aluminum traded at $2,839/ton at 1100 GMT, up 0.7% from Tuesday on technical buying as political uncertainty in Guinea continues.
Guinea is a leading producer of bauxite, which is an essential component used to produce aluminum.
Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of deadly protests. The protests were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
A jump in copper stocks by 1,650 tons to 214,900 tons Wednesday capped earlier gains in copper prices. Stocks have increased by roughly 11% from the start of the year. At 1100 GMT, three-month copper traded at $5,725/ton, down 0.4% from Tuesday.
At the same time, lead traded at $1,700/ton, up roughly 1.5% from Tuesday as lead stocks declined by 875 tons to 35,000 tons Wednesday. LME lead stocks have fallen roughly 18% since the start of the year.
Gold
Gold rallies above 670 usd, hits fresh 7-month highLONDON (AFX) - Gold rallied to a fresh seven-month high above 670 usd as the dollar dipped further against the euro and as traders took comfort from steadying oil prices.At 10.13 am, spot gold was quoted at 668.75 usd an ounce, up from 663.60 usd seen yesterday in late New York trades. Earlier, the metal touched a fresh seven-month high of 670.40 usd."With oil and the greenback adding additional support to gold's already favourable fundamentals a test of the 676 usd July high seems inevitable," said TheBullionDesk.com analyst James Moore.He added today's move above 670 usd bodes well for gold although given that the metal has struggled to go higher on a number of occasions, it may pause before testing the 676 usd level.The dollar extended yesterday's falls against the euro in early European trades as participants awaited Federal Reserve chairman Ben Bernanke's testimony to a US Senate committee later today.Gold usually moves in the opposite direction to the dollar as it is seen as an alternate investment to the US currency. Also a weaker dollar makes gold, which is traded in dollars, cheaper for holders of other currencies.Separately, gold traders were tracking oil prices, which edged slightly lower today after surging yesterday as the International Energy Agency upped its global demand forecast for this year.Strong oil prices usually benefit gold as they increase its appeal as a hedge against oil-led inflation."The current rally (in gold) bodes well for the remainder of the year and could well see prices push towards their all-time high around 850 usd," said Moor.
Copper
DJ MARKET TALK: Copper To Stay Volatile, Price Dips Possible
1004 GMT [Dow Jones] Global copper prices will be extremely volatile in the near term and the possibility of further price falls can't be ruled out, says Commonwealth Bank of Australia. "Copper market bears may argue that increases in exchange stocks reflect changed supply conditions, leading some investors to conclude that the highs for copper are now well behind us," CBA notes, and investors may be discouraged by the decline. The trend to rising stocks adds a bearish tone in the longer-term. London Metal Exchange copper trades last at $5,700 a metric ton, down 1% on the day. (ADH)
1004 GMT [Dow Jones] Global copper prices will be extremely volatile in the near term and the possibility of further price falls can't be ruled out, says Commonwealth Bank of Australia. "Copper market bears may argue that increases in exchange stocks reflect changed supply conditions, leading some investors to conclude that the highs for copper are now well behind us," CBA notes, and investors may be discouraged by the decline. The trend to rising stocks adds a bearish tone in the longer-term. London Metal Exchange copper trades last at $5,700 a metric ton, down 1% on the day. (ADH)
LME INVENTORY REPORT
Copper up 1,650 tonnes at 214,900 tonnesLead down 875 tonnes at 35,000 tonnesNickel up 156 tonnes at 3,924 tonnes Aluminium up 2,925 tonnes at 759,050 tonnesTin down 60 tonnes at 10,320 tonnesZinc down 625 tonnes at 97,075 tonnes
Metals
0923 GMT [Dow Jones] The base metals are well supported Wednesday due to light follow-through buying from Tuesday and a lack of major selling overnight in Asia, says LME trader. "The fact that prices have not come off indicate that the market is steadier than previously thought," says trader. Zinc trades at $3,230 a metric ton, up roughly 0.3% from Tuesday triggered by a drawdown in stocks by 625 metric tons to 97,075 tons. Lead trades at $1,700/ton, up roughly 1.5% from Tuesday as lead stocks decline by 875 tons to 35,000 tons. (LYT)
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