By Leon Westgate
The base metals remain tied to the FX markets for the moment, with the complex recovering from Monday afternoon’s dollar related sell-off, on the back of a weaker dollar this morning.

Initially the euro strengthened against the dollar following last nights agreement by EU finance ministers on the framework for providing emergency assistance to Greece, if needed, while better than expected German investor confidence has lent additional support to the euro and consequently the base metals.

Looking ahead, the focus for the wider markets is the FOMC rate decision and statement this evening. The immediate aftermath of the announcement is likely to be volatile, with the metals likely drifting in line with the currencies until the data is fully digested.

Start trading in commodities from as low as $50. Join now

Copper is edging back towards $7,400 helped by the weaker dollar, though continuing seismic activity in Chile - following last month’s 8.8 Richter scale quake - is also lending support with strong aftershocks continuing to keep the market on edge. So far, however, the direct impact from the quakes on copper operations has been negligible, though power issues in central Chile may become an issue.

LME aluminium inventories saw quite a bit of activity this morning, with Detroit accounting for 22,600 mt of the net 25,050-mt increase in headline stocks. Of note however was a simultaneous 23,850 mt jump in cancelled warrants which actually saw on-warrant stocks at Detroit fall by 1,250 mt.

Elsewhere, an 8,250 mt jump in cancelled warrants in Chicago offset an inflow of 7,100 mt into Toledo, meaning that total on-warrant aluminium inventories actually fell by 3,100 mt. Overall, on-warrant stocks of in US warehouses, remain very volatile, albeit within recent ranges, while headline stocks continue to gradually edge higher.

Vale expects to produce the first output from its $4.3 billion Goro mine in New Caledonia by the end of March or early April. First output was originally scheduled for January. Full capacity is expected to be 60 ktpy, though the operation may take two years to ramp up to those levels.

Courtesy: Standard Bank

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook