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What's Moving the Market?
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20y -Ja-ua
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The London Metal Exchange base metals complex eased slightly in early trade
Monday, following some decent rallies last Friday. A trader contacted by
Platts said: "Friday saw some rallies across the board. The re-weighting
managers went 'early' in nickel and zinc, with record volume seen in nickel on
LMEselect Friday. I guess they bought half of what is needed, and as such the
rest of the complex followed -- short covering -- still, there is little
follow-through this morning so prices are seen drifting." Three-months nickel
was seen at 1007 GMT down $450 at $12,750/mt. UK investment bank Fairfax told
clients there was a, "major rally last week where prices started at $9,820/mt.
The rally was ahead of this week's index re-weighting of funds based on the
Dow Jones AIG Commodity Index. However, no fundamental shift has occurred in
the market with real demand remaining lackluster." Three-months zinc was
indicated up a modest $5 at $1,285/mt..
An analyst told Platts on a positive note: "Metal prices have continued their
strong start to the year, with index buying pushing prices higher. Also, fresh
allocations with the start of the new year, and possibly a feeling that metals
were oversold last year." Copper eased $40 to hit $3,191/mt in premarket
business. Copper stocks increased 1,500 mt at 342,050 mt. UBS analyst John
Reade told clients in a research note: "Base metals posted a positive
performance on Friday, the first trading day of 2009. Although the economic
outlook remains as grim as it was in late 2008, two factors are playing a role
in helping some metals. Firstly, the annual rebalancing of the Dow Jones AIG
Commodity Index will take place in the first half of January ... nickel,
copper and zinc will see a large increase in weightings. Secondly, there is
talk of a January effect in asset markets generally, where investors -- who
are known to be overweight cash -- put money to work and buy risk assets."
Aluminium dipped $18 to $1,552/mt while lead shrugged off that sinking
feeling, up $8 at $1,093/mt. The trader added: "Nickel is the market leader
for now, I guess. Zinc now has $1,320 as the next target to break, but the
overall scenario of a very poor outlook for industrial metals remains."
Three-months nickel slipped $400 to go to $11,250/mt. Basemetals.com analyst
William Adams said: "Looking forward, although there seems to be some pickup
in enthusiasm for the metals we would be wary of getting too comfortable as
economic data and corporate news are both likely to remain a vivid reminder
that the economic situation remains dire. So although the weakness seen in
recent months has no doubt discounted a lot of bad news and therefore could
allow for more short-covering, further poor data is likely to prevent rallies
from running too far." Standard alloy went untraded in premarket trade while
North American was seen at $1,080/mt.
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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