Copper sinks below $6,000 level
By Chris Flood
Published: January 3 2007 11:58 | Last updated: January 3 2007 11:58
ft.com
Copper prices sank below the key $6,000 level on Wednesday as further increases in London Metal Exchange inventories piled pressure on the red metal. Three-month copper fell to $5,965 a tonne after a rise of 1,975 tonnes in LME stocks.
Rising inventories are seen as indicative of a slowdown in demand and improving supply. Prices have also been under pressure as various strikes which were threatened last year in Chile have not emerged.
Copper prices fell by 16.5 per cent in the final quarter of last year and this weakness has encouraged more short-term momentum traders, known as commodity trade advisers, to play the market from the short side.
Copper’s decline encouraged selling in some of the other base metals in the absence of other significant changes in inventory levels.
Nickel traded at £32,300 a tonne after a fall of 24 tonnes in LME stocks while zinc held above the $4,000 level at $4,065 after a fall of 175 tonnes in LME stocks.
Aluminium traders faced options expiry on Wednesday and reported options selling leading to price weakness. Aluminium traded at $2,724.5 a tonne.
Gold traded at $636.30 a troy ounce, supported by weakness in the dollar and rumours that a European Central bank had started buying gold.
On Wednesday, the Daily Telegraph reported that the ECB’s announcement that one of its member banks bought an unspecified amount of gold in the week ending December 22.
Traders said that if the buying was by one of the mainstream European central banks, such as the Bank of Italy, this would be taken as a significant signal by the market as further selling had been expected under the European Central Bank Gold Agreement. This agreement limits selling to 500 tonnes a year. Last year, European central banks did not sell up to the 500 tonne limit and this was seen as an sign that the attitude of public portfolio managers towards gold was changing.
Oil prices eased lower as unseasonally mild weather in the north east of America continued, lowering demand for heating oil. However, weakness was limited by geo-political conserns following Iran’s threat to deliver “a slap in the face” to western countries after the UN’s resolution to impose sanctions as a result of Tehran’s nuclear enrichment programme.
ICE February Brent slipped 39 cents to $60.05 a barrel while Nymex West Texas Intermediate fell 72 cents to $60.33 a barrel.
Copyright The Financial Times Limited 2007 |
