The base metals have led the way higher this morning on the back of fresh fund-related buying activity, with the metals, temporarily at least, appearing to have also de-coupled from the dollar. Instead it has been the dollar playing catch up this morning.
Turnover has been relatively good, for the likes of copper, aluminium, and nickel, but remains subdued elsewhere. Although technical signals have been key so far, as the day wears on and as the initial impetus from this morning’s activity fades, the dollar may well re-assert some control over prices. This afternoon’s US CPI and Housing data will also likely play a role in determining whether prices stall, or push higher still.
Copper was the first metal to break higher this morning, with 3-month prices climbing well above $6,900 and reaching another fresh high for the year. Interestingly, after Monday’s surge higher, this morning’s activity is perhaps what would have expected to be seen yesterday.
Instead Tuesday saw the market take a breather, with copper largely trading sideways. LME copper inventories have meanwhile continued to pick up, with on-warrant stocks climbing a net 3,875 mt this morning.
The main location for the increase was Busan, up 3,975 mt. This morning’s inflow brings the total increase in on-warrant
stocks in Asian warehouses since the start of November, to 25,075 mt, a 39% increase.
Zinc has tracked copper higher this morning, climbing above $2,300. However, the move has come on the back of relatively poor turnover with the metal appearing to be running out of steam hading into the afternoon. LME inventories posted a very large increase this morning, with on-warrant stocks climbing 15,625 mt.
The news helped cap the metals initial surge, but overall has had little impact. The main location for the inflow was New Orleans, up 16,425 mt. In other news, and after giving warning that stockpiles were in imminent danger of running out, China Minmetals has now halted shipments of zinc concentrate from its Century mine in northern Australia.
Elsewhere, nickel has rallied comfortably back above $17,000 on the back of decent buying interest. Newswire reports regarding the potential for privately held nickel stocks in China to make their way back onto the domestic markets, have largely been ignored.
Courtesy: Commodities Research, Standard Bank
