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LME METALS round-up: 24 August

The markets continued to watch the eurozone, the US and China for clues about whether to rise or fall. But the news from these various fronts was either good enough or inconclusive enough to preclude immediate action. So metal prices this week were mixed but stable.

Greece continued to cause concern about its ability to meet financial targets. It would remain prominent in despatches as the prime minister was due to meet Luxembourg premier Jean- Claude Juncker, German chancellor Angela Merkel and French president Francois Hollande in coming days.

Merkel raised market hopes when she said that European leaders supported the European Central Bank’s promise to do “whatever it takes” to support the euro.

But the bank was prompt to describe as “misleading” an article in the German weekly Der Spiegel which suggested that the bank might set limits on the spread between other countries’ and German bonds - which would effectively provide support for eurozonebonds under pressure. US economic data was reasonably good this time round, making any immediate quantitative easing less likely for the time being. Industrialproduction rose by 0.6% in July, according to the Federal Reserve, after having risen by 0.1% in both May and June. At the same time, capacity utilisation by industry rose to 79.3% from 78.9% in both of the preceding months.


Trade organisation Conference Board reported that the leading indicator index for the US economy increased by 0.4% in July to 95.8 (2004 = 100), following a 0.4% decline in June. And the preliminary reading of the consumer sentiment index prepared by the University of Michigan rose to 73.6 in August, up from a final reading of 73.3 for July.

An 8.7% year-on-year fall in foreign direct investment into China let the markets hope that the country might announce some stimulus measures. But a rise in sales of new homes in China in July made this very unlikely in the near future. The precious metal markets, meanwhile, were following the aftermath of the shootings at the Marikana platinum mine in South Africa, where 34 striking miners were killed. The protest was still unresolved as MRW went to press, so much depends on how quickly the mine is working again.

Market details
On the London Metal Exchange (LME), copper for delivery in three months was trading at $7,535 per tonne earlier this week, up from $7,445 a week ago. Stocks of copper held in approved warehouses eased to 234,500 tonnes this week from 237,500 tonnes last week.

Three-month aluminium was trading at around $1,850 per tonne this week, down slightly from $1,864 a week earlier. LME holdings rose to 4,909,950 tonnes from 4,896,725 tonnes a week ago.

Three-month alloy was quoted at $1,745 per tonne earlier this week, against $1,770 last week, while LME stocks stood at 89,560 tonnes, having eased from 90,720 tonnes a week earlier.

Nickel for delivery in three months was trading at $15,629 per tonne, up from $15,377 a week earlier. LME holdings eased to 115,662 tonnes from 115,878 tonnes.

Three-month zinc was quoted at around $1,812 per tonne this week, down from $1,834 last week. LME stocks rose to 973,725 tonnes from 966,025 tonnes a week earlier.

Three-month lead stood at around $1,914 per tonne this week, up from $1,875 a week earlier. LME stocks were 317,250 tonnes, against 322,700 tonnes a week ago.

Three-month tin was trading at $18,869 per tonne earlier this week, up from $17,900 a week ago. LME stocks edged down to 11,630 tonnes this week from 11,660 last week.

Steel billet was trading with the three-month position at around $395 per tonne this week, unchanged on the week. LME stocks stood at 54,600 tonnes, down from 55,835 tonnes a week earlier.

Precious metals, concerned about events in South Africa, were a steadier, with spot gold bullion at $1,624 per ounce earlier this week, against $1,615.80 a week ago. Spot silver was $29.05 per ounce, against $27.99, while spot platinum stood at $1,483 per ounce, up from $1,408.

The charts

Chartists, who plot the prices of various commodities (and securities) on graphs, seek to observe patterns which will help them predict how the various markets are going to behave. One may have more or less faith in the value of this type of analysis, but it is undeniable that significant numbers of traders follow what the numerous chartists are saying, and frequently act on their opinions.

The following are more or less representative of what the charts are forecasting for the main metals:

  • Copper: support is likely around $7,200 per tonne and $6,800, while resistance is likely above $7,800 and $8,000.
  • Aluminium: support is likely around $1,830 and $1,500, while resistance was likely above 1,900.
  • Aluminium alloy: support is likely around $1,675, and resistance above $2,330.
  • Nickel: support is likely around $15,000, while resistance is likely above $16,250 and $19,075.
  • Zinc: support is likely around $1,750 and $1,680, while resistance is likely around $1,870 and $2,125.
  • Lead: support is likely around $1,870 and $1,580, while resistance is likely above $1,950 and $2,225.
  • Tin: support is likely around $17,900, while resistance is probable above $20,750.
  • Steel billet: support is likely around $370 per tonne, while resistance is likely above $505.

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