Reuters - May 31, 2011
The
opinion expressed in this article does not necessarily reflect the
opinion of TVI Pacific. It is meant for information purposes only for
our readers. This is the personal opinion of the author only.
Copper
rose to a four-week high on Tuesday, supported by a firmer euro after
expectations built that a second aid package would be agreed for Greece.
London
Metal Exchange copper for delivery in three months traded at $9,237 a
tonne in official rings from a close of $9,199 on Friday. It hit $9,251 a
tonne, its highest since May 4.
The metal used in power and
construction is steady compared to the start of the month, having
recovered losses from a drop as part of a broad sell-off in commodities
in early May.
“We start off on a much brighter note. We have to
see how long that optimism lasts … The weaker dollar is helping,
Germany’s offer to try to resolve the EU debt situation has helped,”
Credit Agricole analyst Robin Bhar said.
“So fundamentally, good
reasons for slightly more positive sentiment. I just wonder whether it’s
more technical … Today we’ve got trading for the last day of the month,
so month-end window dressing I suspect is keeping things firm.”
The
euro rose to a three-week peak against the dollar after a report saying
Germany could make concessions on efforts to put together a bailout for
Greece, helping to ease fears over a Greek debt restructuring.
A weaker dollar makes commodities cheaper for holders of other currencies.
In
China, there are early signs the country’s appetite for overseas
commodities will recover in the second half of 2011, having been dogged
for much of the first half by the government’s campaign to put the
brakes on growth and inflation.
China is the world’s largest
consumer of industrial metals, accounting for nearly 40 percent of
global demand estimated at 21 million tonnes this year.
Also
lending support to copper prices, inventories of copper in LME
warehouses fell 1,700 tonnes to 467,775 tonnes, data showed. However,
copper stocks are more than 30 percent higher than in early December.
Top
producer Chile’s copper output fell 3.9 percent in April compared with a
year earlier to 438,340 tonnes, the National Statistics Institute said.
LME
aluminium stocks fell 3,525 tonnes to 4,699,300 tonnes, off a record
high of 4.71 million tonnes. Aluminium traded at $2,654.5 from $2,625 a
tonne.
Tin was untraded in rings but bid at $27,900 from $27,500 a
tonne while zinc traded at $2,269 versus $2,275. Battery material lead
was untraded in rings but bid at $2,513 from $2,505 a tonne.
China
plans to phase out battery-powered e-bikes that exceed speed and weight
limits published 12 years ago, a move that could force small
manufacturing plants to close and cut demand for lead there.
Nickel traded at $23,200 from $23,100 a tonne.
This
week, investors will look out for important U.S. macroeconomic numbers
such as ISM manufacturing and payrolls. U.S. consumer confidence is due
later on Tuesday.
“The data calendar is fairly busy this week and
due to the current soft patch in economic growth, chances are high that
some numbers will surprise to the downside,” Credit Suisse said in a
note.
It highlighted manufacturing PMIs for the U.S. and China
due on Wednesday and U.S. labour market data due on Friday as events
that could potentially weigh on sentiment.
“While all of these
data appear to paint a very negative macroeconomic picture, it is
important to keep in mind that the current soft patch in growth is most
likely to be temporary. Hence price dips offer in our view good entry
opportunities for the longer-term,” it said.
http://business.financialpost.com
|