With the middle of the year now behind us, and the new financial year now in gear, metal prices remain in positive territory on the back of activity in the manufacturing sector in China, however some analysts remain sceptical about any further upside in the market. Whilst prices have not increased to any mind blowing levels, we find the price at the end of June was higher than the average on Copper, Aluminium, Lead & Nickel. The Australian dollar has seen a steady rise throughout the month currently trading above USD94.3/c.
**** DJ LME Metals Tread Mostly Lower — Market Talk ****
By Laura Clarke @ wsj.com
Base metals on the London Metal Exchange drift lower, with the exception of zinc. Analysts see lackluster trading ahead as the seasonally quiet summer period plays out. “The stronger tone in most of the base metals of late seems to be wearing thin…the likes of copper, aluminium and lead seem to have run into selling near resistance levels,” notes FastMarkets head of research Will Adams. “On balance we expect range-trading to dominate so we wouldn’t be surprised to see prices work lower as we head into the summer months.”
**** DJ Copper Prices Seen Marching Higher ****
By Ira Iosebashvili @ wsj.com
Some investors are turning bullish on copper prices, brushing aside concerns sparked by a probe into the metal’s place in China’s financial system.
Instead, these investors are focusing on a rebound in manufacturing world-wide, which they expect will boost copper demand broadly. Increasing consumption by factories will offset any decline in the use of copper as collateral to back loans as a result of the probe, these investors say. China is the world’s biggest copper consumer and importer, though how much of the metal goes to manufacturers is unclear.
Copper prices hit a four-month high on Monday. Futures have recouped almost all of their losses from early June, when news broke that Chinese authorities were investigating allegations that a trading company in the port of Qingdao took out numerous loans against the same stock of metal.
Hedge funds and other fund managers as a group turned optimistic on copper last week after exiting bets that prices would rise in the previous three weeks, as the probe was ramping up. As of June 24, money managers held 14,325 more bullish contracts than bearish ones. A week earlier, they had more bets on falling prices
Many investors placed wagers on rising prices following the release of data showing China’s manufacturing sector grew in June for the first month this year. Improved U.S. economic data also have supported prices, investors say. The U.S. is the world’s second-largest copper consumer. ”I believe the Qingdao case is a specific fraud, conducted by certain people, and is specific to that warehouse,” said George Cheveley, portfolio manager at Investec in London, which manages $118 billion. “Meanwhile, copper demand in China and the U.S. is strong.”