Copper Rises But Off Highs Midway

Copper finished the London Metal Exchanges (LME) mid-session $3 up on the day but failed to hold onto highs set earlier in the session, dealers said.

The LME benchmark three-month copper contract ended the mid-day kerb at $1,772 from the close at $1,769. But copper failed to hold onto highs of $1,779 set in the pre-market.

Dealers said copper failed to push through the resistance level at $1,780 which if breached could have seen the metal targeting levels above $1,800. Copper pushed higher on the stocks and also the Polish strike but lost ground after that, one trader said.

The stronger dollar also resulted in some far eastern selling of copper earlier which did not help the LME base metals complex, dealers said. It was a really poor showing, another dealer said.

 

Aluminium initially pushed higher on the back of copper but consolidated around the $1,450 level. It ended the mid-day kerb at $1,451, $3 off the previous close. Aluminium was bashed this morning, got a bit higher on copper but dropped back after that, one LME floor dealer said.

The other base metals generally followed copper lower. Zinc ended $12 down at $1,110. Tin dropped $40 to end the kerb at $5,630. Nickel lost $15 to end at $5,625. Lead also lost ground, ending at $573, down from Mondays close at $579. Alloy was quiet and last bid at $1,300, some $10 down on the close.

Meanwhile, Asia saw some copper and zinc movements in the past week but traders said yesterday that the recent metal data released in Japan, a main Asian buyer, would keep the market bearish.

Steady copper flows into China were still seen. There has been Chinese demand but not in big quantity, a Singapore-based trader said. Its just usual buying, the trader said. There were offers from producers such as Chile waiting in Hong Kong to ship the red metal into China, traders said.

They said that apart from copper, Chinese zinc is flowing to Singapore warehouses waiting for opportunities to move the metal to the LME, they said. Chinas zinc supplies usually go to Singapore and the LME. The price difference between LME and Asia is not so big at the moment, so there is no rush to move supplies to the West, unless western customers prefer Chinese zinc, said a zinc dealer.

Another trader said, while Chinas domestic copper prices were still high, producers were not willing to export their supplies.

The Chinese are looking at prices very carefully. They will move the zinc to the West only when prices there are very good, the trader said. Zinc premium was seen by the trade in Singapore at about $5 a kg, and some traders even saw lower than $5. With indicators in Japan, the main Asian metal buyer, showing no immediate economic recovery, activities by Asian players would stay minimal, traders said. Japans refined zinc inventories in February at producers surged by 38.8 per cent to 75,211 tonnes from the same 1997 month, while domestic output climbed 1.3 per cent year-on-year to 48,372 tonnes.

Official data also showed demand for steel products in the April-June quarter would fall 6.8 per cent to 23.24 million tonnes from the same period a year earlier.

Reflecting the downturn in the construction and the car sectors, domestic demand for crude steel is estimated at 22.72 million tonnes in second-quarter 1998, down 15.1 per cent from a year earlier. Things in Japan look so bad that the rest of Asia wont see business either. Its very tough for traders now, said one trader. While aluminium dipped $4 to $1,454 on the LME, traders saw some good support at $1,450. (Reuters)

Demand in the Far East is still pretty bad but some consumers are waiting to buy once the price falls below $1,450, said a trader.

Aluminium premiums in Asia started to plunge after Japanese premiums in term contracts for the second quarter settled at $44-$47 per tonne, sharply down from $71-$74 in the first quarter, due to a regional economic slowdown.

Aluminium shipments have been re-directed to the US and Europe from Asia during the past few weeks after producers failed to find Asian destinations for their supplies. In the near term, I dont see any aluminium coming this way, said a trader.

However, traders also agreed that Asias aluminium premiums, which hovered above $40 a kg, had dropped to very low levels and further falls were unlikely. (Reuters)