LME Markets have been reasonably steady over the past week, however in yesterday’s trade, we saw a slight decline across the board. As you will note in the second noted article, LME trade week starts on Monday, and is the time when suppliers lock in 12 month contracts. Historically this is expected to be quite a volatile week of trade and will no doubt keep international traders continuing to tread cautiously.
Month to date has seen the USD Exchange rate remain reasonably steady. Using the Hedge Settlement Rate as a gauge, the average rate this month has been 1.0246 and yesterday locked in at 1.02355.
**** DJ BASE METALS: Copper Marks Fresh 1-Month Low **** By Tatyana Shumsky
NEW YORK–Copper futures edged to a one-month low Monday as a stronger dollar and concerns about demand weighed on prices, though stronger equities offset some of copper’s declines.
Copper futures spent the bulk of the trading day in negative territory, yielding to pressure from a stronger dollar. The greenback rallied against the euro, pushing the common European currency to a low of $1.2891. Dollar-denominated copper futures become more expensive for traders who use other currencies when the greenback strengthens, dissuading those participants from the market.
Copper and equities tend to move in the same direction as both are seen as indicators of future economic performance.
Earlier in the day, copper futures posted sharp declines as traders worried that demand from China would sputter as its economy continues to slow. China consumes about 40% of the world’s copper output, the largest single destination for the metal. Analysts at Citigroup noted that copper inventories at Shanghai Futures Exchange warehouses rose 12% last week to 181,514 tons, the highest stockpile level since May. They added that physical copper premiums, a convenience and delivery surcharge paid in addition to the futures price, have started to decline in China “which suggests plentiful availability of copper.”
**** DJ BASE METALS: LME Metals Mostly Lower; China Fears Weigh **** By Francesca Freeman
Base metals are mostly lower on the London Metal Exchange Monday, weighed by concerns over Chinese economic growth.
With the LME’s annual industry week kicking off Monday and key Chinese growth data looming later in the week, base metal investors are treading cautiously, said analysts. Of particularly note this week is the release of third-quarter gross domestic product data from China Thursday. As the world’s top metals consumer, economic news and data from the region tend to be read for demand signals.
Base metal trade is liable to be volatile this week, as metal market participants gather in London for LME Week. LME Week is an annual gathering of the metals industry where many suppliers and buyers seal long-term contract terms for the following year. “As LME Week gets underway we would expect some choppy trading as the bearish and bullish arguments get aired,” said FastMarkets.com analyst William Adams. “On balance, we still see these pull backs after the recent rallies as consolidation–in the medium term we feel there is room for prices to remain steady supported by Chinese infrastructure spending, while longer term we feel the drag from Europe will keep prices capped,” he added.