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What's Moving the Market?
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20er-De-em
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As the US was finally officially endorsed as being in recession by a leading
thinktank and the National Bureau of Economic Research, London Metal Exchange
prices continued the weak spirit by retreating further into the red. A trader
contacted by Platts said: "The Dow is obviously leading the way -- down almost
700 points yesterday." The Dow Industrial closed Monday down 679.95 points at
8,149.09. He added: "I personally think analysts' predictions should be taken
with a pinch of salt, to be honest. I don't mean that to be rude but how
anyone can still think they can make sensible predictions of price forecasts
in the current climate is beyond me -- they have consistently got it wrong and
they will continue to do so." Three-month aluminium dipped $20 to hit
$1,715/mt by 1010 GMT, as stocks in LME-registered warehouses rose a further
2,725 mt to 1,826,525 mt. JPMorgan recently predicted that stocks could hit
1.9 million to 2 million mt by end-2008 and 2.5 million mt by mid-2009.
JPMorgan analyst Michael Jansen told clients: "With the month end out of the
way now, the risk is that the base metals trade significantly lower for
another 1-2 weeks. Aluminium and copper are the most vulnerable, but all of
the base metals have very poor fundamentals right now." Copper lost $73 in
premarket business to be indicated at $3,517/mt. Fairfax said of copper:
"Prices come under further pressure in the face of worsening economic fears.
Nippon Mining is considering cutting output by 10-20%, and holds 66% of Pan
Pacific which produces 610,000 mt/year of copper. Should the rumoured Chinese
SRB metals buying spree take place, copper prices could rally, however we
await to see tangible evidence of such activity. Meanwhile, Chilean state
copper commission Cochilco has dropped estimates from $3.40/lb to $1.60/lb in
'09 ($3,526/mt)." The trader said: "The only sensible forecast is base metals
are going back to pre-2006 levels."
He added: "I mean before the China industrial revolution and the fund frenzy
took over. All the markets remain vulnerable to volatility which means they
can trade within wide price ranges." The trader went on to say, "the flow of
business is not balanced at the moment so we get sellers and no buyers, and
then buyers and no sellers -- usually because the market is also running
short." Jansen said: "There is talk of a bear market rally in either late
December or early January but even if this transpires it is unlikely to be
robust enough to shake the physical and trading community out of being short
the complex." Three-months lead sunk $30 to $1,100/mt, tin was indicated at
$12,100, having closed Monday's kerb untraded, last seen at $12,370/mt, while
zinc lost a marginal $6 to go to $1,160/mt. Nickel was the only exception, up
$100 at $9,900/mt. Both alloys received zero bids in premarket business.
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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