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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (391)	11/28/2002 2:37:57 PM
From: Stephen O	Read Replies (1) \| Respond to of 2131

(MB) - LME copper not spurred by US figures 2002-11-27 17:01 (New York) November 27 (Metal Bulletin) - LME trading has remained slack in advance of the "long weekend" caused by the US Thanksgiving holiday on November 28. LME stocks fell 2,225 tonnes to a level of 867,200 tonnes on November 26, yet prices continued to drift downwards. A trader commented that volumes were weak, and activity was driven by funds. He added that "it doesn't need more than a few lots to move the market". Recent activity has seen buying from funds and the Chinese, yet recent price gains have proved unsustainable. The trader added that Chinese buying and fund buying is "old news", but the copper price nonetheless rose to $1,640 per tonne on this activity alone. "What we really need is some genuine consumption to kick-start a sustainable price increase." Investors have also been holding back this week, in anticipation of the announcement of key US third quarter results. "Genuine" activity now seems even less likely in the near future. At first sight the US figures released on November 26 appear encouraging. US car sales and after-tax corporate profits both improved in the third quarter. Consumer confidence rose from nine-year lows and US GDP rose 4% in the July to September period, from 1.3% in the previous quarter. Economists, however, did not interpret the results favourably, pointing to a build-up in business inventories as driving the GDP growth. An analyst commented that inventories are unlikely to have such a positive effect in the fourth quarter, and consumer confidence was lower than anticipated. The copper market showed a similar apathy to the results. There was some profit taking following the announcements, and prices drifted back towards $1,600. A trader said that the recent rally towards $1,640 had been premature. Though he did not expect to see the lows of 2001, the trader anticipated a downward correction to levels around $1,550. US copper premiums are benefiting from ongoing strikes and production decreases that have reduced the amount of available cathode, leaving room for further gains, trade sources said. Copper cathode premiums ranged between 2.75 and 3.5 cents per lb during the past few years, but recently have firmed at the higher end of the scale. Premiums in the Midwest have risen to between 3.25 and 3.5 cents, with those in the Northeast also put at more than 3 cents per lb, traders said. One metals trader said he expected cathode premiums to rise to around 3.25 to 3.5 cents in the Northeast in 2003 as a result of spot market tightness. One Northeast trader said he was asking for more than 3 cents on his orders and wasn't having any problems getting buyers to pay it. "Only merchants have copper these days, since no one is holding any inventory--neither producers nor consumers--leading to higher premiums," he added. "There is a little displacement because of the labour situation," one Midwest metals trader said. "With the problems at Noranda and Kennecott, no-one is really sure what is going on." Another copper trader agreed, noting that the tight copper market was not leaving much metal around. As such, producers were running short of cathode and were the ones doing most of the buying. "There is not a lot of metal around and a lot of people are buying the stuff." Other traders, though, remained skeptical. "This is just a short-lived premiums jump," one trader said. "There is a little displacement because of the labor situations. Premiums are trying to go up, but over the long term, who knows?" Metal Bulletin newsroom, London Tel +44 207 827 9977 Fax +44 207 928 6892 New York Tel +1 212 213 6202 Fax +1 212 213 6273 -0- (BN ) Nov/27/2002 22:01 GMT