FX:Crude oil futures edge lower as strong dollar weighs
London 30/08/2011 - Base metals firmed during Tuesday’s LME premarket trading, holding around multi-week highs, as the complex enjoyed some follow-through momentum from last Friday, when shortcovering underpinned late gains.
“After the LME was closed for trading yesterday due to a public holiday, metal prices are partly catching up with the price rallies of other cyclical commodities this morning,” said broker Commerzbank.
Support is also coming from better-than-expected economic data from the US, which is seen as evidence that its economy is possibly in not such a bad shape, setting the tone for a much anticipated year-end rally
"Given that the mood of the market seems to be happy to take on more risk, we would not be surprised to see further price strength – at least in the short term," William Adams of FastMarkets said.
Supply issues could provide added support for copper, as possible strike action in Indonesia’s Freeport-McMoRan Copper & Gold's Grasberg mine - the world’s third largest mine - could impact availability and push up prices.
“Another production outage would further exacerbate the supply situation on the global copper market and should lend support to the price of copper,” added Commerzbank.
However, the overall mood still remains tentative, given the battering that global financial markets took at the start of the month, with metals prices still clawing back some of the heavy losses sustained in a week-long liquidation spree. There have been few signs, either, of fresh buying emerging.
"Investors have remained cautious as net speculative long exposure was cut further last week. For the sector to gain fresh traction more signs of accelerating economic activity are needed," broker Credit Suisse said.
Later this week, China will release its August manufacturing PMI on Thursday, while the US ISM PMI for August will also be released that day.
The key US data event this week, non-farm payroll figures for August, will follow on Friday. Before then, the metals will focus on end-month operations on Wednesday and any signs of fresh index fund interest.
ALL METALS SEE MORNING GAINS
Monday's advances on the SHFE and supply-side issues helped copper, which rose to its highest since August 5 and is currently trading at $9,137 per tonne, an increase of $62 on Friday, but slightly down on today’s session high of $9,175.
Warehouse net stocks at 464,375 tonnes were down 550. Cancelled warrants – metal booked for removal – were down 1,650 to 7,700, the lowest level since February 11, 2010.
“We favour the downside in the medium-term and are looking for a selling opportunity; however, prices may still have further to rebound in the short-term,” Adams added.
Aluminium stocks were down 6,275 to 4,642,725 tonnes, as were cancelled warrants, which slipped 5,575 tonnes to 311,100. Prices saw a moderate increase of $16 to $2,394.
Nickel, meanwhile, saw its cancelled warrants reach the highest ever recorded, at 10,194 tonnes, up 1,518 tonnes. Inventories were also up at 105,780 tonnes, an increase of 762. Business at $21,891 was up $441.
Zinc inventories dropped 2,725 to 858,675 tonnes the lowest since July 6. Cancelled warrants at 82,900 tonnes were down 2,725. Prices rose $34 to $2,280.
Lead prices, after dropping in mid-August, have been steadily rising and are currently at $2,497 per tonne, up $11. Inventories were up 675 to 317,875 tonnes. Cancelled warrants were unchanged at 9,575 tonnes.
Tin prices were up $295 to $24,100. Warehouse stocks at 22,780 tonnes saw a small increase of 70, but cancelled warrants rose to 2,025 tonnes, an increase of 390, which could help support prices.
Steel prices at $585/600 were up on Friday, while stocks were down 195 to 54,015 tonnes. Cobalt was indicated at $34,500/36,500 and molybdenum at $30,750/36,000.
