LME Daily Metals Report

LME Daily Metals Report
EDWARD MEIR • THURSDAY, FEBRUARY 5, 2015
1-203-656-1143 • EDWARD.MEIR@INTLFCSTONE.COM • WWW.INTLFCSTONE.COM
As of
2/4
CU
AL
PB
ZN
NI
SN
NAA
312
10
MAV
5545
40
MAV
6005
100
MAV
6403
13,681
783
1861
1864
1942
49
3,718
121
1865
1882
1983
2175
51
8,755
285
2123
2143
2217
13945
15600
50
6,672
207
14962
15311
15869
11,830 (-10)
18377
20600
40
285
20.3
19221
19514
19911
78,320 (-240)
NA
2165
61
66
7.5
1948
1910
2076
High
LOW
CLOSE
CSH/3
LME STOCKS - CH
SUP
RESIS
RSI
VOL
O/I (‘000)
5755
5628
5705
28
284,600 (+32,500)
5353
6000
46
23,577
1896
1866
1878
-16
4,020,575 (-7,475)
1800
1930
53
1868
1836
1868
-15
214,575 (+275)
1742
1918
2169
2131
2140
-9
619,500 (-2,950)
2005
15425
14860
15125
-55
423,480 (-1,308)
19090
18860
19000
-37
1980
1975
1970
-17
rd
LME/SH CU ARB: NA
Shanghai 3 Active Month (Last) in Yuan : CU: 41,160 (+720) AL: 13,225 (+185) PB: 12,480 (-20) ZN: 16,330 (+85)
Shanghai Stocks – Jan 30: CU: 137,042 MT(+2,905) AL: 187,114 MT(+1,043) PB: 48,852 MT(-321) ZN: 85,639 MT(+9,286)
2015 HIGH / LOW
2014 HIGH / LOW
CU
6303.75 / 5339.5
AL
1898 / 1756.75
PB
1918 / 1743
ZN
2214 / 2005.75
NI
15677 / 13945
SN
20100 / 18700
7460 / 6230
2119.5 / 1671.25
2307 / 1815.25
2416 / 1937
21625 / 13334
23849 / 18345
This commentary was written by Edward Meir (edward.meir@intlfcstone.com) at 9:15 a.m. on February 5 US EST.
We had a very mixed day in the commodity markets on Wednesday, with most of the action concentrated in energy and currencies,
while both precious and base metals took something of a backseat. Oil prices retreated by more than $4/barrel, giving up all of
Tuesday’s massive gains -- plus some. Prices were undone by the realization that the recent advance in oil may have been too
much too soon, particularly in light of the latest EIA report that showed crude oil stocks jumping by 6.3 million barrels last week,
almost double prevailing estimates. Total inventories now stand at 413 million barrels, a new record high.
In the currency markets, the dollar regained ground yesterday mainly at the expense of the Euro, which buckled as Greece was back
in the news, but this time in a more negative light compared to what was being conjured up only 48 hours. Late on Wednesday, the
ECB abruptly rescinded its acceptance of Greek bonds in return for short-term funding and justified the move by saying prospects
appear uncertain for a new deal between the European creditors and the Greek government. Greek banks will retain access to
emergency lending, but at a higher cost and subject to ECB approval. All this means that Greece’s central bank will now need to
step in and provide liquidity, something that it can do at most for another two to three weeks before it too, comes under pressure.
The ECB announcement unnerved the US equity markets; the Dow gave up a 116-point advance yesterday to finish pretty much flat
on the day, but European stocks weathered the news fairly well today and are now mixed after being lower earlier. Not so in Greece,
where yields have shot up and stocks tumbled some 22% at the opening before recovering somewhat. The bottom line seems to be
that Greece is not an issue that will be solved in a matter of days and we likely will be going through more ups and downs until the
country is able to secure its next financing tranche or exits the Euro. On that latter point, the German ZEW think tank thinks the odds
of that happening to be at least a 20%. Meanwhile, discussions continued today between the Greek finance minister and his
German counterpart, with the two sides apparently “agreeing to disagree”.
This material should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy,
promotional element or quality of service provided by FCStone, LLC. FCStone, LLC is not responsible for any redistribution of this material by third parties, or any trading decisions taken
by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact FCStone
designated personnel for specific trading advice to meet your trading preferences. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the
viewpoints and trading strategies employed by FCStone, LLC.
LME Daily Metals Report
EDWARD MEIR • THURSDAY, FEBRUARY 5, 2015
1-203-656-1143 • EDWARD.MEIR@INTLFCSTONE.COM • WWW.INTLFCSTONE.COM
In our markets, we saw a sharp fall in copper earlier in the day after LME stocks came out with a massive increase of some 32,500
tons, the biggest increase we recall seeing. It is now very clear that the large amount of concentrates that have been available in the
markets for some time (and which has been contributing to rising TC/RC charges) is finally making its way to the refined side after
not crossing over for much of the second half of last year.
In other markets, oil prices are higher by about $1.20 after being down earlier in the day. US stocks are expected to open up, with
Dow futures pointing to a 95 initial increase. Gold prices are off by some $2/ounce, but we think the precious metal will do better over
the course of the next few weeks on account of heightened volatility in the US equity markets and the fact that the Greek situation
remains far from settled.
In the currency markets, the dollar is weaker right now, with the Euro trading back above the 114 mark, while the sterling and yen
are at $1.52 and 117.40, respectively.
In terms of US macro news, the ADP employment came out yesterday showing an increase of 213,000 jobs and coming in slightly
below the 230,000 expected. We just got weekly initial claims data showing an increase of 278,000 (expected at 290,000) along with
Q4 productivity readings (at -1.8%, expected at +.2%) and the December trade balance (-$46.6 billion, expected at $-38 billion).
Out of Europe, the European Commission raised its Euro-area growth forecasts to 1.3% in 2015 and 1.9% next year, up from
November projections of 1.1% and 1.7%, respectively. The Commission also expects consumer prices to drop 0.1% this year, the
first annual decline since the introduction of the Euro in 1999 before increasing to 1.3% in 2016.
In geopolitical news, Moscow said that it will see any decision by the US to provide Ukraine with lethal weapons as a threat to
Russia's security, this according to Russian Foreign Ministry. In the meantime, a senior US State Department official told CNN of a
"dire security situation” in eastern Ukraine in light of the recent fighting.
In corporate news, Brazil’s Petrobras was hit by a wave of resignations yesterday, as CEO Maria das Graças Foster said she would
step down, along with five other senior executives including the company’s CFO and exploration chief. Jose Carlos Grubisich, former
head of Braskem; Henrique Meirelles, former president of Brazil's central bank; Rodolfo Landim, a former Petrobras executive,
former Vale CEO Roger Agnelli along with the company's current chief, Murilo Ferreira, are among the names bandied about as
possible CEO’s.
--------------------------------------------------
COPPER
SUPPORT: $5353 / RESISTANCE: $6000
Copper is at $5650, down $55, but we did get to a low of $5568 at one point after the LME stock increase came out.
* The “China Smelter Purchasing Team” (CSPT), which consists of leading Chinese copper smelters called a special meeting in
Shanghai earlier this week to discuss potential responses to the recent decline in copper prices, Metal Bulletin reports, but a final
decision was not reached. "It’s not a bad idea to cut production now, given miners are under cost pressure and some of them have
already started cutting output. Why should we also not step back?" one smelter source was quoted as saying. "TC/RCs levels are
good, but that’s not comparable with the copper prices falls." Chinese producers elsewhere have tried to shore up local prices. Late
last month for example, Chalco formed a price coalition with eleven other smelters to support local aluminum prices by proposing to
sell 1.04 million tons of 2015 production at a price set by Chalco rather than those published by the exchanges; no word on how
private sales are supposed to “out-price” the local exchanges.
---------------------------------------
This material should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy,
promotional element or quality of service provided by FCStone, LLC. FCStone, LLC is not responsible for any redistribution of this material by third parties, or any trading decisions taken
by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact FCStone
designated personnel for specific trading advice to meet your trading preferences. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the
viewpoints and trading strategies employed by FCStone, LLC.
LME Daily Metals Report
EDWARD MEIR • THURSDAY, FEBRUARY 5, 2015
1-203-656-1143 • EDWARD.MEIR@INTLFCSTONE.COM • WWW.INTLFCSTONE.COM
ALUMINUM
SUPPORT : $1800/ RESISTANCE: $1930
Ali is at $1871, down $6 and trading between $1850-$1876.
* European aluminum premiums are expected to continue to fall until the end of February when buyers are likely to return to the
market for second-quarter volumes, Metal Bulletin reports. Duty-paid premiums have dropped to $450-480 per ton this year from
$480-500 last year, while duty-unpaid premiums have reached $370-390 per ton from $400-430.
* Japan's aluminum premiums are likely to stay at a record high level of $425 per ton throughout this year supported by higher US
spot premiums and tight global supply outside of China, this according to Sumitomo as per an article seen on Reuters. Japanese
premiums have risen for five straight quarters now, hitting a record high of $425 per ton for Q1 2015 deliveries, but this was only
slightly higher than the previous quarter. "China will be a wild card," the Sumitomo executive said. "If China steps up its export of
aluminum products or even aluminum ingots, that will change the whole picture and drive down the premiums." Sumitomo predicts
Japanese premiums will slip to $400 per ton in 2016 and $370 in 2017.
* The International Aluminum Institute will stop reporting monthly aluminum producer inventory levels, Metal Bulletin reported, as
submissions have not been made on a timely basis.
------------------------------------ZINC
SUPPORT: $2005 / RESISTANCE: $2175
Zinc is at $2128, down $12, with a trading range of $2114-$2140.
------------------------------------LEAD
SUPPORT: $1742 / RESISTANCE: $1918
Lead is at $1864, down $3/MT and trading between $1840–$1865.
------------------------------------NICKEL
SUPPORT: $13,945 / RESISTANCE: $15,600
Nickel is at $14,935, down $190 and having a bad week so far. Prices have traded between $14,755-$15,060 today.
* Reuters reports that First Quantum Minerals said its Ravensthorpe nickel plant in Australia will run at 70% of capacity while it
conducts repairs following an acid spill in December. The company is forecasting output of 24,000-30,000 tons for this year.
* Crude steel capacity in China is (incredibly) likely to grow again this year despite difficult market conditions, as new projects are
coming onstream, this according to a Chinese Ministry of Industry report cited by Reuters. However, the China Iron & Steel
Association sees domestic crude steel output falling 1.1% to 814 million tons this year following a decline in consumption last year,
the first ever. China's crude steel capacity reached 1.16 billion tons at the end of 2014, with its production accounting for 49.4% of
global output.
------------------------------------TIN
SUPPORT: $18,377 / RESISTANCE: $20,600
Tin is at $18,900, down $100 and trading between $18,900-$19,000.
This material should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy,
promotional element or quality of service provided by FCStone, LLC. FCStone, LLC is not responsible for any redistribution of this material by third parties, or any trading decisions taken
by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact FCStone
designated personnel for specific trading advice to meet your trading preferences. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the
viewpoints and trading strategies employed by FCStone, LLC.