As we move toward the middle of the month, markets remain firm. When this happens, traders tend to be more cautious in their buying, not wanting to over commit on high priced material. Particularly with data coming out of Europe, markets continue to be very fickle.
**** Norsk Hydro Plans to Cut Output at Australia Aluminum Plant ****
Norsk Hydro ASA (NYO), Europe’s third- largest aluminum maker, plans to cut the capacity of its Kurri Kurri smelter in Australia’s New South Wales state by a third due to low metal prices. Norsk Hydro may cease production at one of the smelter’s three potlines, which together have capacity to produce about 180,000 tons of aluminum annually, Halvor Molland, a spokesman for the company, said by phone. The operation is currently running at a loss, he said. The cut comes after Alcoa Inc. (AA), the biggest U.S. aluminum producer, said last week it will close 531,000 tons of capacity, 12 percent of its global supply, after the price of the lightweight metal slumped amid a global surplus, Aluminum supply has exceeded demand and inventories have soared, leaving some smelters unprofitable at current metal prices.
**** LME Metals Fall In Asia After S&P Downgrades **** By Clementine Wallop Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)–Base metal prices mostly fell in Asian trading on the London Metal Exchange Monday after Standard & Poor’s Friday downgraded the credit ratings of nine European countries, including France, Spain, Italy and Portugal, damping appetites for risky assets.
Three-month copper traded as low as $7,909.50 a metric ton early in the session, as the downgrades reignited concerns over the effect of the euro-zone debt crisis on the region’s demand for industrial metals. Copper came off its lows as the market digested the news; it was trading at $7,990/ton at 0600 GMT, down 0.1% from its previous settlement.
The metals will likely stabilize around current levels in European trading, as the downgrades had been largely priced into the market, traders said. “People have been aware of the threat of these downgrades for the last few months,” a Singapore-based trader noted.
**** Base Metals Likely To Trend Lower This Week – Trader ****
0358 GMT [Dow Jones] Base metals are likely to drift lower this week as Asian investors close out their positions ahead of the Lunar New Year holiday and physical demand in China falls, a Singapore-based trader says. Market sentiment is nervous, and prices remain more sensitive to macroeconomic developments in Europe than fundamental news, he says. “Not many people would be brave enough to build new longs at the moment, but I don’t know too many people who’d take a big short either,” he says.