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LME METALS round-up: 31 August

The markets were expecting further economic stimulus from the governments of the main economic powers, which boosted prices across the board.

They were put in this frame of mind by the release of the latest minutes of the US central bank’s key policy-making Federal Open Market Committee, which showed most members arguing for increased monetary accommodation.  (The FOMC is scheduled to meet eight times a year, though it will meet more often if needed, and publishes the minutes of scheduled meetings three weeks after the event.)

Federal Reserve (US central bank) official James Bullard has recently said that the economic outlook has improved since the FOMC meeting, but the markets preferred to believe that the US and other governments would do something.  They will now be watching the forthcoming meeting of the world’s central bankers at Jackson Hole (in Wyoming in the US) to see if the participants give any clues about their future policies. 

Despite Mr Bullard’s views, a number of indicators remained poor.  Initial jobless claims in the US in the week ending 18 August came in at a disappointing 372,000 against expectations of 365,000 or thereabouts.  US durable goods orders (excluding aircraft and other transport equipment) fell by 0.4% in July, their fourth decline in five months.

For China, the preliminary purchasing managers’ index covering manufacturing, published by the bank HSBC, declined to 47.8 in August from 49.3 in July, suggesting that the Chinese economy was slowing down – despite the People’s Bank of China (the central bank) injecting liquidity over the last two months.

In Germany, the business climate reading for August prepared by the Ifo economic research institute was 102.3, down from 103.2 in July, and slightly below the expectations of 102.7.

In France, prime minister Jean-Marc Ayrault warned that the forecast of 1.2% economic growth for 2013 may have to be scaled down.

In Japan, the government has reduced its expectations for the economy for the first time since October 2011, warning that “headwinds from abroad” might stop exports from bolstering output once reconstruction spending – after the earthquake and tsunami of March 2011 – dried up.  Meanwhile, a monthly survey of business sentiment by the Reuters news agency pointed to declining prospects for Japan’s manufacturers in August.

Market details

On the London Metal Exchange, copper for delivery in three months was trading at around $7,619 per tonne earlier this week, up from $7,535 a week earlier.  Holdings of copper in warehouses approved by the exchange edged down to 234,200 tonnes earlier this week from 234,500 tonnes a week earlier. 

Three month aluminium was quoted at around $1,912 per tonne earlier this week, up from $1,850 a week earlier.  LME stocks eased to 4,893,375 tonnes from 4,909,950 tonnes a week earlier.

Three month aluminium alloy stood at $1,780 per tonne earlier this week, up from $1,745 a week earlier; LME stocks were 88,440 tonnes, having edged down from 89,560 tonnes a week earlier.

Three month nickel was trading at around $16,391 per tonne, up from $15,629 a week earlier.  LME stocks eased to 115,236 tonnes, from 115,662 tonnes a week earlier.

Three month zinc stood at around $1,865 per tonne earlier this week, up from $1,812 a week earlier.  LME stocks dipped to 961,425 tonnes earlier this week, from 973,725 tonnes a week earlier.

Three month lead was quoted at around $1,963 per tonne earlier this week, up from $1,914 a week earlier.  LME holdings stood at 314,200 tonnes, down from 317,250 tonnes a week earlier.

Three month tin was trading at around $20,800 per tonne earlier this week, up from $18,869 a week earlier.  LME stocks edged down to 11,560 tonnes earlier this week from 11,630 a week earlier.  The declining LME stocks have combined with slower Indonesian exports to boost tin prices.

Steel billet was trading with the three month position at around $380 per tonne earlier this week, down from $395 a week earlier.  LME stocks stood at 53,755 tonnes, down from 54,600 tonnes a week earlier.

Precious metals made the most of the prospective liquidity injections.  Thus spot gold bullion rose to around $1,664.00 per ounce earlier this week, from $1,624.00 a week earlier; spot silver rose to $30.86 per ounce, against $29.05, while spot platinum stood at $1,528 per ounce, up from $1,483.

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.

  • Copper: support is likely around $7,500 per tonne and $7,200, while resistance is likely above $7,690 and $8,000.
  • Aluminium: support is likely around $1,880 and $1,825, while resistance was likely above 1,950.
  • Aluminium alloy: support is likely around $1,675, and resistance above $2,330.
  • Nickel: support is likely around $16,250, while resistance is likely above $16,500 and $17,400.
  • Zinc: support is likely around $1,800, while resistance is likely around $1,880.
  • Lead: support is likely around $1,840, while resistance is likely above $1,985 and $2,225.
  • Tin: support is likely around $20,750, while resistance is probable above $22,525.

 

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