Analyst Ed Meir looks at what is moving the metal markets on
Thursday May 10.
Copper and General Commentary:
again on Wednesday, led by copper, which fell to its lowest
level in three weeks. However, just like the decline on
Tuesday, prices managed to pick up off their lows, and in
copper's case, reclaim the $8,000 mark. Most other markets also
lost ground, although the extent of the selloff was not as
pronounced as was seen earlier in the week. The euro fell for
an eighth straight day, closing well below $1.30, but Brent
bucked the trend, finishing higher.
There was not much new in terms of headlines other than the
fact that the markets continue to worry about Greece. The
leftist leader charged with forming a government has apparently
thrown in the towel and it is now up to the third place
finisher, the socialist PASOK party head, to give it a go. In
the meantime, a Bloomberg poll reveals that 50% of investors
are now predicting a euro exit by Greece as early as this year,
a stunning turn of events compared with what was being expected
only a few weeks ago.
Metals are mixed right now, erasing earlier losses brought on
by disappointing Chinese trade data. In this regard, the
government reported that copper imports by China declined for a
second month in April, coming in at 375,258 metric tonnes,19%
lower than in March, but still higher than the 262,676 tonnes
from a year ago. Scrap copper imports totalled 370,000 tonnes
in April, compared with 430,000 tonnes in March.
In the broader trade category, Reuters reports that the annual
growth rate in Chinese imports during April was just 0.3%, far
below an expected 11% increase, while exports were up 4.9%
versus expectations of an 8.55% increase. Exports to emerging
economies fell alongside those to Europe, but it is the stall
in imports that is more worrying, as it suggests that consumer
demand is not picking enough to offset the softness in exports.
In other markets right now, the precious metals group is
slightly weaker, energy prices are off slightly, but the euro
is steady, now trading at $1.2960. US stocks are expected to
open higher, but not by much.
We don't have much to add to what we have written in recent
commentary and still expect prices to drift lower in the days
ahead. Having said that, many complexes, particularly the
precious metals group and equities, are getting quite oversold,
with RSI's in the low 30s. Therefore, there is the possibility
of some sort of short-covering rally setting in, but we would
need to see a headline triggering it. One possibility could be
if the PASOK party in Greece surprises the markets and stitches
together a governing coalition. However, we would not want to
bank on such an outcome too much, as the more likely scenario
is one where the whole process grinds on towards yet another
election, meaning more uncertainty for the euro and the markets
Technically, we are now at $8,106 on copper, up $52, and
fluctuating within a relatively narrow $100 band between $8010
and $8129. LME stocks were down again today by roughly 1,100
Ali is now at $2,046, down $3, with
an intraday low of $2,035 seen.
Zinc is at $1,953, up $10, and very
quiet. For now, we seem to be hanging on to $1,940 support, but
Lead is at $2,084, up $11 and still
looking relatively steady.
Nickel is at $17,250, up $55, but we
did get to a low of $17,054 at one point in the day.
Tin is at $20,625, up $20; next support
is at $20,000.