Metal Bulletin Research's Cole on the Outlook for Copper, Zinc
2005-08-17 10:27 (New York)
By Mark Cobley
Aug. 17 (Bloomberg) -- The following are comments by Andy
Cole, an analyst in London with Metal Bulletin Research, on his
outlook for copper and zinc prices.
Copper fell as much as 3 percent today in London after
inventory in London Metal Exchange-monitored warehouses rose 11
percent to 61,075 metric tons, the highest since November 2004.
Zinc rose as much as 1.4 percent today on the LME after talks
to end a strike at Teck Cominco Ltd.'s Trail smelter in British
Columbia broke down.
Cole spoke in a telephone interview in London.
On today's decline in copper prices:
``Deliveries into the LME were quite large today. It was the
biggest net inflow in this recent stock build phase and maybe
there is a feeling that it's accelerating.
Copper ``got well overbought and the rise was well overdone.
We have seen this before, of course. It could as easily bounce
back tomorrow. It's a very volatile market.''
On copper's effect on other metals traded on the LME:
Investment funds ``take a position in all the metals across
the board, to hedge their risk, and that pushed the other metals
in the same direction as copper.''
On the effect of the Trail strike on zinc prices:
``Teck are losing 800 tons a day, 24,000 tons since the
strike started. They have chosen to store concentrates that they
would have processed. Usually the concentrate will go to another
smelter and the metal will be produced elsewhere. So that really
is 24,000 tons lost to the market. But even that is nothing when
you look at the stocks of zinc. They are still really high.
``There is not enough new mining capacity coming on stream.
Mine supply has been underperforming for this year and will do
next year, it will only start picking up in 2007.''
On his overall outlook for metals:
``The fundamentals are still all strong. The day-to-day
fluctuations we are seeing are part of a broader up-trend. The
message is that we are still in an up-trend and those investors
will be back. It's still boom time.''
--Editor: Wallace |
