Commodity Blog

Posts Tagged ‘LME’

Copper is an industrial metal important for housing construction. It’s also used in construction of refrigerators, automobiles, cell phones and other goods. Copper was steadily rising in the past year, but it experienced sharp decline through January to the beginning of February. Then, in the second half of February to March, the metal rebounded. What do analysts say about copper’s perspective? In fact, opinions vary on this matter.

There are voices supporting optimistic outlook for copper price. They are speculating about global economic recovery, supporting demand for the industrial metal. Data from the U.S., one of major copper consumer, about expanding economy especially supports optimism for copper performance, as healthy economy and decreasing jobless rate lead to more housing construction and, as a result, more copper demand. Reports about dwindling stockpiles of LME-monitored copper also can result in price increase. LME-monitored inventories of copper dropped to almost 540,000 metric tones, lowest amount since early February.

But many analysts are inclined to pessimistic view on copper ability to rise or even maintain current price level, some even were going as far as calling current price level “a bubble”. They point out that key reason for the metal’s outstanding performance was huge amount of copper imported by China, one of the world’s greatest consumer, causing copper price to double in 2009. In 2010 it turned out that China imported more copper than it really requires. And it seems that suggestion about demand for the metal rebounding after New Year holidays in China did not prove true. There is also concern that economic recovery may be slow and supply may exceed demand. Earthquake in Chile caused price surge at first but, while being harmful for copper output, didn’t affected copper production as strong as was expected.

So, how can we predict copper moves amid such uncertainty? First answer lies in the very nature of copper as industrial metal. Copper is tied very strongly with overall economical picture, so the world economy can suggest possible copper moves. If economy will continue to rebound, then copper will continue to go up. Another factor worthy consideration is a dollar. Commodities, including copper, are very dependent on the U.S. currency these days, so look for the greenback performance for suggestion where commodities may be heading. It’s also looks like copper performance is strongly correlated with the stock market, so you can plan your trade if you can predict where the stock market is heading.

Aluminum producers lowered the fee for Japanese buyers after China resumed halted capacity and supply in Asia rose as smelters began production. Premiums for the three months ending June 30 fell to $122 per metric ton down from $125 to $130 this quarter (the highest level in 14 years). The premium for Good Western-grade aluminum ingot more than doubled in 2009 as record purchases by China and decreased supplies from Russia caused shortage of the metal in Asia.

China, the largest buyer of copper in the world, decreased import after record purchases in 2009 as local smelters restarted production. Aluminum smelters in China, the largest producer of the industrial metal, resumed 5 million tons per annum of idled capacity in past year as profit margins improved with increasing prices. China’s purchases of refined aluminum dropped to 40,059 metric tons in January from 42,106 tons in December as the nation have ample inventories after it have bought more metal than necessary on outlook for a demand recovery.

Delivery for aluminum in three months rose 0.3 percent to $2,225 per ton by 15:57 on the London Metal Exchange. The price has reached previously a 15-month high.

Copper rose in London on outlook for increasing demand in Japan, the fourth biggest buyer of the metal in the world. Japan’s gross domestic product grew 4.6 percent in the fourth quarter. Imports of the metal in China declined as much as 546,000 metric tons. Yet analysts say that this decline can be more than offset by rising global demand. Three-month delivery for copper rose $70 (1 percent) to $6,880 per ton by 16:52 on the London Metal Exchange.

Wheat futures fell in Paris on speculation that rising global stockpiles will decrease prices. The U.S. Department of Agriculture reported that global wheat stockpiles will increase from 164 million metric tons a year earlier to 195.9 million tons by the end of May as supply exceeds demand for a second year. Prices may yet go up with farmers’ reluctance to sell at current prices and good European Union exports. March delivery for milling wheat fell 0.4 percent to 125.25 euros ($170.35) per metric ton today on NYSE Liffe.

Refined copper imports in China, the greatest buyer in the world, rebounded in November with rising domestic prices and increasing demand. China may increase imports to 200,000 tons per month in the first quarter of 2010 as high domestic prices made purchases from overseas sellers cheaper. Delivery for copper in three months on LME dropped 0.6 percent to $6,895 per ton by 15:21 in Shanghai.

Corn slid and soybeans went down as the dollar gained, curbing the attractiveness of commodities as an alternative investment. Analysts says that the strong dollar “is encouraging some speculators to reduce long positions”. March futures for corn delivery went down $0.055 (1.4 percent) to $3.945 per bushel as of 10:32 on CBT. March futures for soybean delivery slid $0.1075 (1.1 percent) to $9.9775 per bushel in Chicago.

Crude oil rose as the dollar dropped and on speculation about global economic restoration. A rising dollar cut demand for commodities as an alternative investment. February delivery for crude oil gained $0.62 (0.8 percent) to $74.34 per barrel by 13:13 on the New York Mercantile Exchange.

The global aluminum surplus will be cut by 54 percent in 2010 compared to this year as demand increase in China, the greatest buyer in the world, with economical recover. Chinese demand also increase with help of government’s economic measures. World demand for the metal will climb 7.6 percent to 37.6 million metric tons in the next year.

Chinese aluminum production will rise 16 percent to 15.5 million tons in 2010 as smelters encouraged restarting their work by increasing metal prices. Despite this analysts don’t expect any significant export from China next year. Global supply will rise 3.5 percent to 38.8 million tons in 2010.

Analysts predict that delivery for aluminum in three months will reach $1,900 per metric ton on the London Metal Exchange in January to March. The metal traded $2,127 per ton as of 17:50 in Tokyo.

Copper slid in London as growing inventories and the rebounding dollar pushed down demand for the metal. Stockpiles monitored by the London Metal Exchange increased 0.1 percent to 432,075 metric tons, the highest level since April 23rd. March delivery for copper slid 2.3 percent to $3.1245 per pound on NYMEX.

Gold imports by India, the greatest buyer in the world, declined for the seventh straight month as record prices decreased demand for the precious metal. Gold prices touched a record for a third time this week as falling dollar boosted attractiveness of the metal as an inflation hedge. Immediate delivery for gold for dropped 0.7 percent to $1,183.15 per ounce.

Nickel will slid 8 percent by the end of this year as demand declines. Prices may fall to $16,000 per metric ton in the first half of 2010 before rising in the second half as demand from the steel industry increases, yet supply will remain greater then demand in the next year. Three-month delivery for nickel slid 5.9 percent to $16,325 per ton at 7:31 on LME.

Wheat went up on outlooks that larger share of the U.S. grain harvest will be used as livestock feed after the corn price rose. Approximately 190 million tons of the grain will be used as feed for animals in the year ending on May 31st. This figure may increase as corn futures rise, thus increasing appeal of wheat as a feed source. March futures for wheat delivery went up $0.0575 (1 percent) to $5.58 per bushel by 10:27 on the Chicago Board of Trade.

Copper advanced as the dollar fell, boosting appeal of the metal as an inflation hedge. Inventories monitored by LME increased for the ninth straight session, suggesting that demand may fall. March futures for copper delivery advanced $.017 (0.6 percent) to $2.99 per pound as of 12:05 NYMEX.

Copper prices slid in New York on signs of waning demand in China today. Inventories monitored by LME rose for a sixth straight session to the highest since May 5th as there are few domestic buyers and the metal waits to be re-exported.

The metal rises and falls according to movement of the dollar. Some investors buy copper and other commodities when the U.S. currency falls to preserve their purchasing power.

Copper may decline at the start of the next year because of slower Chinese imports. The metal more than doubled in the fist half of this year with the help of record imports in China, a declining dollar and expectations for an economic rebound. China may decrease copper imports 30 percent in 2010 as consumption level lowers.

December futures for copper delivery slid $0.0085 (0.3 percent) to $2.959 per pound by 11:42 on the New York Mercantile Exchange’s Comex division. The metal will likely reach $2.60 per pound in 2010, up from $2.34 this year.

Copper prices dropped to a week low as growing inventories caused speculation that demand is falling for the metal used in wires and pipes. Inventories monitored by the London Metal Exchange surged to 379,825 metric tons (1.5 percent) today, the highest level since May 11th. Traders are seeing uncertainty about future demand as an opportunity to take some profit.

Copper mines where labor negotiations are being held this year have the combined annual capacity about 1.2 million tons. There is potential for strike at Antamina. Antamina, owned by BHP Billiton Ltd., Xstrata Plc, Teck Cominco Ltd. and Mitsubishi Corp., is trying to find agreement with the workers union.

December futures for copper delivery fell $0.026 (0.9 percent) to $2.967 per pound by 9:55 on the New York Mercantile Exchange’s Comex unit. Three-month delivery for copper dropped $56.75 (0.9 percent) to $6,518.25 per metric ton, or $2.957 per pound, on LME.

Copper prices doubled this year as Chinese imports jumped. Concern that supply is being constrained has kept prices at current levels, despite a prediction that Chinese import will fall.

Survey showed that gold may go down because a rising dollar eroding appeal of the precious metal as a hedge against inflation. The U.S. Dollar Index has gained 1.3 percent from the lowest in the 14 months on October 21st. Gold have trend to move inversely to the U.S. currency. December delivery for gold went down 0.8 percent to $1,047.50 per ounce at 12:55 yesterday in New York.

Copper may fall in London on speculation the dollar will rebound, eroding demand and making metals priced in the U.S. currency more expensive for holders of other monies. Analysts said that the metal would fall next week. Three-month delivery for copper remained at $6,651 per metric ton as of 17:00 yesterday on the London Metal Exchange.