Analyst Ed Meir looks at what is moving the metal markets on
Friday May 4.
Copper and General Commentary:
We had a very
strange day to say the least on Thursday, as practically
everything was down. Even the dollar traditionally a
safe haven during market declines did not do much,
finishing pretty much unchanged against the euro. Although
copper finished lower as well, turnover was light, with COMEX
copper volume estimated at around 50,000 lots by Reuters, more
than one third below the 30-day average.
Things are not much different right now, with base metals
quietly mixed in the wake of the just-released non-farm payroll
number. US employers decreased hiring for the second straight
month, adding just 115,000 workers in April, well below
forecasts calling for 170,000 jobs being created. The
unemployment rate, however, ticked down to 8.1%.
Despite the disappointing report, investors may suspect that
the Federal Reserve could entertain thoughts of putting through
yet another easing programme in place, which may explain why
base metals are holding up as well as they have.
However, other markets are down, with crude being particularly
weak and off by another $2/barrel. A series of upcoming
meetings with the Iranians this month is raising expectations
that some sort of breakthrough could be in the cards. We will
have to wait and see what happens, but certainly if there is
going to be progress, it will be now rather than later given
the unprecedented degree of pressure being brought to bear on
the Iranian economy.
Of course, the French and Greek elections take place this
weekend as well, and polls show Francois Hollande still
retaining his lead. We should have an interesting day on
Monday, as markets will have a chance to assess how exactly the
European landscape will change in light of expected political
We expect to see more pressure develop in most markets over the
course of next week, as the US growth story becomes less
compelling. Additionally, if copper now arguably the one
metal propping up the rest of the group starts to buckle
on reports of impending deliveries out of Chinese stockpiles,
that could be a potential game-changer as well.
Technically, we are now at $8,225 on copper, down $4, but stuck
in a very tight trading range. LME stocks continue to plunge,
off another 4,575 tonnes overnight, with cancelled stocks up by
6,175 tonnes. Spreads have remained tight; although cash/May
has come in to $35 back from $45 yesterday, May/June and
June/July are holding, each at $13 and $8 back, respectively.
The full cash to threes spread is around $90, about $25
higher than Thursdays levels.
Ali is now at $2,083, down $7, and
about where we were at this time on Thursday.
Zinc is at $1,990, up $6.
Lead is at $2,085, down $7 and having a
very poor week thus far.
Nickel is at $17,490, up $205, and
about where we were at this time on Thursday; charts continue
to look weak.
Tin is at $21,725, down $80.