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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (12770)	2/24/2000 8:44:00 PM
From: Lucretius	Read Replies (3) \| Respond to of 42523

you see this... Wednesday February 23, 1:28 pm Eastern Time FOCUS-Palladium falters as Tokyo changes rules (adds nymex move) By Sharman Esarey LONDON, Feb 23 (Reuters) - Palladium dropped on Wednesday, after setting a string of all-time highs this month, as the Tokyo Commodity Exchange (TOCOM) scrapped free trade and froze prices in a bid to gain control of the tumultuous market. The decision, which the world's main palladium futures mart said it took to prevent ''widespread disorder in palladium trading,'' requires trade at Wednesday's closing prices for an indefinite period for all contracts bar the nearby position. It comes soon after two reductions in the daily price limit and moves to help small clients as TOCOM struggled in vain to curb a panic as prices surged. New York's NYMEX exchange later announced another step to calm trade, saying it would more than double palladium futures margins at the end of the day's trade, the second increase since last week. The rise increases the cost of trading in the market. TOCOM's unprecedented market intervention forced palladium, which had charged into the European day on Wednesday, to retreat from an early $815 peak to fix at $798 an ounce in the morning and at $755 in the afternoon. Traders said the exchange was clearly worried about behind-the-scenes market manoeuvring but that it was playing with fire by changing the rules mid-game. ''I'm not saying this is a bad thing,'' a trader said. ''But sudden changes might deter bona fide investment.'' The rule change was seen favouring one side of the market -- small-scale traders who had miscalculated and sold metal forward. The losers were seen as the big Japanese houses who were riding the metal's climb on haphazard supply and car maker demand, and who could now no longer expect higher prices. ''TOCOM is fighting a rearguard action against the unruly nature of the palladium market,'' said analyst Rhona O'Connell of T. Hoare Canaccord. ''The move appears to be designed to force some professional traders to liquidate long positions, and designed also to try and help some small-scale traders who are still short as they have been unable to cover.'' Panicked shorts, who faced losses as prices rose, have scrambled to buy palladium at TOCOM and pushed the market up daily trading limits for some two weeks running as the cash metal has leapt 66 percent in February. In Europe, trade in palladium, which has doubled in price in 2-1/2 months, came to a virtual halt with the news as the price buyers were bidding and sellers were offering diverged to a yawning $50 an ounce from a normal spread of about one dollar. ''What sort of signal does a $50 buyer/seller spread and a rule change send? They are penalising the longs in favour of the shorts,'' another analyst said. Palladium's run began last summer and it has since climbed some 140 percent as unpredictable supplies from main producer Russia, combined with booming car sales, prompted car makers to purchase and stockpile the metal used to cleanse exhaust fumes. Palladium is also used in electronics and 15 percent of demand is from dentistry, where the industry is looking at substitutes. But 58 percent of world demand of 8.3 million ounces comes from car manufacturers. Car makers use anywhere from a couple of grams of platinum group metals up to 15 grams -- and demand could grow given tightening emissions standards in the major car markets of Europe, the United States and Japan. Russia, the world's largest producer, has failed to deliver palladium in the first six months of each year since 1997 through bureaucratic red tape. While it said recently that it would resume shipments soon, the market has been waiting to see the material before it counts on it.