It has been a volatile week on the commodity markets with the LME falling in the first 4 working days before a slight recovery last night. For the AUD/USD it’s been one direction, up with the dollar now at 105.66. The high AUD/USD is also receiving notable press with two former Reserve Bank board members, economists Warwick McKibbin and Adrian Pagan calling for Reserve Bank intervention to reduce the exchange rate and ease the burden on Australian industries. The Economist’s Big Mac Index, which looks at whether currencies are fairly valued according to whether the cost of a McDonalds Big Mac burger is above or below an international mean, suggests the Australian dollar is 8 per cent overvalued.
**** China copper smelters mull exports increase after tax cuts ****
HONG KONG, Aug 6 (Reuters) – China’s copper smelters are planning to increase refined copper exports following recent tax adjustments that have reduced their export costs and made such trades more attractive, two sources at smelters said on Monday.
The move could shift thousands of tonnes of refined copper back London Metal Exchange warehouses and pressure global prices, which have so far shed more than 13 percent from the year’s high hit in February. ”We plan to export at least 10,000 tonnes of copper a month. Total exports (from China) could be between 20,000-30,000 tonnes per month,” said a sales manager at a large smelter, referring to copper exports in the second half of the year. China’s tax bureau has since July 1 cut the 3 percent value-added tax for tolled copper exports
**** DJ MARKET TALK: Base Metals Lower, Limited By Summer Doldrums ****
0831 GMT [Dow Jones] LME Base metals are lower in light summer trading as euro-area concerns are expected to keep the complex in tight ranges in the near-term, says FastMarkets.com. “While Friday’s data may have reduced QE3 expectations, the fact the US is expanding–albeit at a more moderate pace–will continue to underpin risk sentiment and lift the metals,” says FastMarkets.com analyst James Moore. ”That said, given the light summer conditions and the fundamental problems still facing the euro zone, we expect the metals to hold their recent ranges with further resistance expected at $7,600/ton in copper and $15,790/ton in nickel,” he adds.