DJ BASE METALS:LME Copper Breaks Key Support, Drags Complex Down Thursday, May 24, 2007 4:59:48 PM http://www.osterdowjones.com/
DJ BASE METALS:LME Copper Breaks Key Support, Drags Complex Down
LONDON (Dow Jones)--Fund liquidation pulled base metals lower late in Thursday's session, with the slide lead by LME copper as it broke below key support at $7,000 a metric ton.
As of 1650 GMT, LME copper was down 3% at $6,980/ton, with spillover falls in nickel and aluminum, down by over 2%, and in zinc, down over 1%.
One of the bigger hedge fund players had started to short the market, but copper prices hadn't been moving their way, so they forced it in there more aggressively," said a London broker.
The move lower took the other metals with it, he added.
But despite the recent correction, with three-month copper down some 16% since early May and nickel a hefty $5,000/ton lower, most analysts see potential for further rises before the peak demand season is over.
"The (copper) stock environment overall is quite friendly," said JPMorgan analyst Michael Jansen. "Concentrate is quite tight and headline macro-economic indicators suggest ongoing strong demand for now," he said. "There is a good chance we're going to have another run higher...but not to record highs as long as (global) stocks continue to fall," he said.
Continued draws from LME warehouses have left 136,100 tons of copper available to consumers, down almost 40% from early February. However, recent stockbuilds in Shanghai warehouses have fueled bearish sentiment.
Detailed inventory data due from Shanghai Futures Exchange Friday may trigger a rise, analysts said, if the data showing a lower stock build than expected.
Some analysts have mooted at 3,000-ton build after some 17,000 tons entered stores last week.
In other metals, lead eased from recent record highs and LME nickel took another knock.
As of 1628, LME lead was down 1% from Thursday at $2,110/ton, while nickel was hovering above $45,000/ton, and zinc was 2% lower at $3,570/ton.
An ongoing dispute between two contractors and their employees at Voisey's Bay Nickel Company added to background nickel price support, said Barclays Capital in a daily note.
The mine's mill is currently shut down as the company works through issues raised by its employees. The closure of the mill, however, was not expected to affect concentrate shipments, Bob Carter, manager of Public Affairs with Voisey Bay Nickel Co. told Dow Jones Newswires Thursday.
Global refined zinc production from January to March exceeded refined consumption by 84,000 metric tons, the International Lead and Zinc Study Group said Thursday. Global refined lead consumption during January-March exceeded supply by 1.165 million metric tons, the IZSG also said.
The global refined lead market during the same period was 1.165 million metric tons in deficit.
Prices in dollar a metric ton. 3 Months Metal Bid-Ask Change from Wednesday PM kerb Copper 6990.0-7000.0 Dn 210 Lead 2120.0-2121.0 Up 5 Zinc 3565.0-3570.0 Dn 84 Aluminum 2755.0-2760.0 Dn 65 Nickel 45000.0-45010.0 Dn 1,100 Tin 13800.0-13900.0 Unch Aluminum Alloy 2220.0-2240.0 Dn 5 Aluminum Alloy 2200.0-2210.0 Dn 45 (-NASAAC) -By Melanie Burton, Dow Jones Newswires; +44 (0)20 7842 9412; [email protected]
(20min delay)