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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (847)	10/15/2001 2:48:33 PM
From: Stephen O	Respond to of 1643

Metals Prices, Trading Drop, Forcing Some Companies to Quit London, Oct. 12 (Bloomberg) -- A drop in copper and aluminum prices has hurt trading volumes and led two companies to quit the London markets this week, while processors lay off staff because of shrinking profits. N.M. Rothschild & Sons said it's closing its base metals trading business. Scotiamocatta, a unit of Canada's Bank of Nova Scotia, will withdraw from floor trading on the London Metal Exchange, an exchange official has said. ``Prices are low, and with global growth slowing down, the demand for base metals has fallen,'' said Geoffrey Spice, managing director of N.M. Rothschild, in an interview. ``We don't see the position improving in future.'' Copper, the LME's benchmark metal, has plunged 23 percent this year to the lowest level in more than two years, cutting the revenue of traders who earn commissions on the value of their transactions. LME trading volume has slumped 15 percent in the past year on diminishing demand from industrial customers, said Jonathan Haslam, a spokesman for the biggest metals exchange. The slump isn't just for industrial metals. Today, Credit Suisse First Boston said it quit the London gold fix, an 80-year- old institution that sets the benchmark price of gold. The bank also will stop making markets in precious metals. Metals producers are also paying a price. Norsk Hydro ASA announced it would fire 600 workers today after taking a charge of about $69 million Wednesday on failed aluminum trades. London metals recycler A. Cohen & Co. has slashed more than two-thirds of its staff in the last 18 months as revenue plummeted from making aluminum alloys. Declining Margins Aluminum has dropped 17 percent this year to its lowest level since June 1999. ``We're just bobbing along the bottom,'' said Alan Silvester, A. Cohen's production director. ``We've cut costs right to the bone.'' Profit margins on the company's aluminum alloys has dropped to about 30 pounds ($43) a metric ton from 100 pounds four years ago, forcing the company to shift output to stay in business, he said. The LME has lost half of its so-called ring dealers, who make markets on the exchange floor, in a decade. Scotiamocatta's announced departure will whittle the number to 11. ``One could understand if people were getting slightly concerned about perceptions of the LME,'' Haslam said in an interview. ``We are not immune from any aspects of the world economy.'' Even as Rothschild and Bank of Nova Scotia back away from the LME, HSBC Holdings Plc, Europe's biggest bank when ranked by market value, said it may join the exchange to meet client demand for metals trading. Enron Metals, one of the biggest ring dealers, said it was staying the course. ``We are committed to developing our business as a long-term player in the industry,'' said Enron Metals President Joe Gold. --Jon Hurdle in the London newsroom (44) 207 673 2095 or jhurdle1@bloomberg.net/cm/*tc