METALS-Base Metals Up As Emergency Aid Lifts Sentiment-Shanghai Metals Market

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METALS-Base Metals Up As Emergency Aid Lifts Sentiment

Industry News 09:08:49AM May 11, 2010 Source:SMM

NEW YORK/LONDON, May 10 (Reuters) - Industrial metals were broadly higher on Monday, driven by a $1 trillion emergency aid package aimed at stabilizing broader markets and resolving the Greek debt crisis that has threatened to sink the euro.

The deal, hammered out by European Union finance ministers, central bankers and the International Monetary Fund in weekend talks, was the largest in more than two years since G20 leaders pumped money into economies after Lehman Brothers' collapse.

Copper for July delivery HGN0 on the New York Mercantile Exchange's COMEX division jumped 8.35 cents, or nearly 2.7 percent, to settle at $3.2280 per lb, near the upper end of its $3.1665 to $3.2675 session range.

On the London Metal Exchange, benchmark copper CMCU3 closed at $7,120 a tonne from $6,940 on Friday.

The metal, used in power and construction, last week lost more than 6 percent of it value, hitting lows of $3.0055 per lb and $6,632.75 a tonne, their lowest since early February.

"The pullback that we saw was excessive, given the underlying improvement in fundamentals that is going on," Gayle Berry, an analyst at Barclays Capital, said.

"This rebound is in line with the recovery you're seeing in those fundamentals," she added. "Inventory trends are turning more positive for most metals ... we saw the physical markets really pick-up since the price pullback."

Bart Melek, Global Commodity Strategist with BMO Nesbitt Burns in Toronto, agreed, saying that there were now few negative catalysts in place likely to prevent a broad commodity rally.

"The U.S. employment picture is improving and credit across the world should start flowing better," Melek said in a research note on Monday. "Global industrial production is still in its nascent stage, with at least another year of strong recovery still to come, which
should continue to support commodity prices."

On Friday, data showed U.S. employment grew at its fastest pace in four years in April.

Another positive fundamental boost came from news that the European Central Bank will buy euro zone government bonds to support fractured markets.

"There is a feeling that however much money you throw at Greece, they might still think it's in their best interests to partially default or default. This (ECB news) makes it seem far less likely," Robin Bhar, an analyst at Credit Agricole said.

CHINA OUTLOOK
Many market participants fear demand from China, the world's largest consumer of industrial metals, will tumble as the country's government tightens policy to rein in price pressures.

Others think policy will not be tightened to the extent that it significantly hits demand. They are not worried about a 4.4 percent fall in April Chinese copper imports, after a 41.6 percent gain in March.

"They are down only marginally ... domestic prices do not favor imports," Bhar said.

Positive sentiment was further reinforced by the Chinese central bank which said it would maintain appropriately loose monetary policy.

Another supporting factor is falling stocks of metal in LME warehouses. Copper stocks have fallen 64,200 tonnes since the middle of February to 490,875, while aluminum stocks are down 134,525 to 4.5 million tonnes since a record high above 4.64 million tonnes hit
on January 21.

Aluminum CMAL3 ended at $2,144 a tonne from $2,072.5, zinc CMZN3 at $2,139 from $2,091, tin CMSN3 at $17,750 from $17,600 and nickel CMNI3 at $23,000 from $22,550 on Friday.

Lead CMPB3 was untraded at the close but last bid at $2,108 a tonne from $2,042.
 

Key Words:  base metal  LME market 

METALS-Base Metals Up As Emergency Aid Lifts Sentiment

Industry News 09:08:49AM May 11, 2010 Source:SMM

NEW YORK/LONDON, May 10 (Reuters) - Industrial metals were broadly higher on Monday, driven by a $1 trillion emergency aid package aimed at stabilizing broader markets and resolving the Greek debt crisis that has threatened to sink the euro.

The deal, hammered out by European Union finance ministers, central bankers and the International Monetary Fund in weekend talks, was the largest in more than two years since G20 leaders pumped money into economies after Lehman Brothers' collapse.

Copper for July delivery HGN0 on the New York Mercantile Exchange's COMEX division jumped 8.35 cents, or nearly 2.7 percent, to settle at $3.2280 per lb, near the upper end of its $3.1665 to $3.2675 session range.

On the London Metal Exchange, benchmark copper CMCU3 closed at $7,120 a tonne from $6,940 on Friday.

The metal, used in power and construction, last week lost more than 6 percent of it value, hitting lows of $3.0055 per lb and $6,632.75 a tonne, their lowest since early February.

"The pullback that we saw was excessive, given the underlying improvement in fundamentals that is going on," Gayle Berry, an analyst at Barclays Capital, said.

"This rebound is in line with the recovery you're seeing in those fundamentals," she added. "Inventory trends are turning more positive for most metals ... we saw the physical markets really pick-up since the price pullback."

Bart Melek, Global Commodity Strategist with BMO Nesbitt Burns in Toronto, agreed, saying that there were now few negative catalysts in place likely to prevent a broad commodity rally.

"The U.S. employment picture is improving and credit across the world should start flowing better," Melek said in a research note on Monday. "Global industrial production is still in its nascent stage, with at least another year of strong recovery still to come, which
should continue to support commodity prices."

On Friday, data showed U.S. employment grew at its fastest pace in four years in April.

Another positive fundamental boost came from news that the European Central Bank will buy euro zone government bonds to support fractured markets.

"There is a feeling that however much money you throw at Greece, they might still think it's in their best interests to partially default or default. This (ECB news) makes it seem far less likely," Robin Bhar, an analyst at Credit Agricole said.

CHINA OUTLOOK
Many market participants fear demand from China, the world's largest consumer of industrial metals, will tumble as the country's government tightens policy to rein in price pressures.

Others think policy will not be tightened to the extent that it significantly hits demand. They are not worried about a 4.4 percent fall in April Chinese copper imports, after a 41.6 percent gain in March.

"They are down only marginally ... domestic prices do not favor imports," Bhar said.

Positive sentiment was further reinforced by the Chinese central bank which said it would maintain appropriately loose monetary policy.

Another supporting factor is falling stocks of metal in LME warehouses. Copper stocks have fallen 64,200 tonnes since the middle of February to 490,875, while aluminum stocks are down 134,525 to 4.5 million tonnes since a record high above 4.64 million tonnes hit
on January 21.

Aluminum CMAL3 ended at $2,144 a tonne from $2,072.5, zinc CMZN3 at $2,139 from $2,091, tin CMSN3 at $17,750 from $17,600 and nickel CMNI3 at $23,000 from $22,550 on Friday.

Lead CMPB3 was untraded at the close but last bid at $2,108 a tonne from $2,042.
 

Key Words:  base metal  LME market