what the heck is happening, page-196

Considering current market sentiment, the fundmentals suggest a break lower is more likely.

15:25 16Dec08 RTRS-METALS-Shanghai aluminium limit down, LME hits 5-yr low
* Shanghai copper, aluminium limit down
* London copper off 3.8 pct, aluminium hits 5-year low
* Support from China stimulus, weak dollar crumbles on
economy woes

By Nick Trevethan
SINGAPORE, Dec 16 (Reuters) - Shanghai copper and aluminium
fell by their 4 percent limits and London aluminium dropped to a
five-year low on Tuesday as worries about slow demand overcame
support from a soft dollar and plans to boost China's economy.
Shanghai futures dropped 4 percent or 990 yuan to
23,570 yuan a tonne, while aluminium futures slipped to
10,355 yuan a tonne from Monday's settlement.
London Metal Exchange aluminium shed almost 4 percent
to touch $1,435, its lowest in over five years, and copper
dipped as much as 3.8 percent to $3,050.
"Shanghai went limit down in copper and aluminium and London
chased the fall lower. There isn't much upside potential in these
markets right now," a trader in Hong Kong said.
"People are looking at the dollar, but I think the weakness
is creating an opportunity to sell metals rather than buy and we
don't want to be wasting money chasing rallies that will get sold
into."
By midday, prices had recovered, with copper at $3,100 in
London and 23,880 yuan ($3,487) in Shanghai.
The dollar fell to a two-month low against the euro as
expectations mounted that the Federal Reserve will cut interest
rates to near zero later in the day. Usually a decline in the
greenback supports dollar-denominatated assets like base metals
by making them cheaper for holders of other currencies.
"It's a little disappointing that the dollar has gone from
$1.25 to $1.37 against the euro in the space of a week or so, and
had such little impact on metals," ANZ senior commodities analyst
Mark Pervan said.
"The focus remains on the data. We had another batch
yesterday that was pretty awful which makes it hard to see a
rebound in the near term. Every time the market gets back on its
feet, it gets knocked down again."
Pervan said a lot of downside risk had been priced into base
metals, and the wider commodity complex, and expected prices to
trade sideways until the end of the year unless the dollar sees a
reversal of fortune, which would seriously undermine prices.
The single currency extended gains above $1.37 ahead
of the outcome of the Fed policy meeting, widely expected to
result in a rate cut of at least a half percentage point to 0.50
percent.
Data on Monday showed U.S. November industrial output fell
0.6 percent versus October's 1.5 percent rise [ID:nTRT000351],
and there remain worries about the fate of U.S. automakers after
lawmakers last week failed to agree on a resue plan,

Metals prices at 0340 GMT
Metal Last Change Pct Move End 2007 Pct chg 08
LME Cu 3100.00 -70.00 -2.21 6670.00 -53.52
SHFE Cu* 23880.00 -770.00 -3.12 56880.00 -58.02
LME Alum 1450.00 -43.00 -2.88 2403.00 -39.66
SHFE Alum* 10450.00 -340.00 -3.15 18180.00 -42.52
COMEX Cu** 137.75 -0.75 -0.54 304.10 -54.70
LME Zinc 1070.00 0.00 +0.00 2370.00 -54.85
SHFE Zinc 9150.00 -135.00 -1.45 18950.00 -51.72
LME Nickel 9900.00 -325.00 -3.18 26350.00 -62.43
LME Lead 1022.00 -3.00 -0.29 2550.00 -59.92
LME Tin 11200.00 -200.00 -1.75 16400.00 -31.71
LME/Shanghai arb^ 1034
Dollar/yuan 6.8470 \ 6.8480
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE