BASE METALS: Metals Pare Losses but End down on Poor US Data

Aug 25, 2010 (Dow Jones Commodities News via Comtex) --

LONDON (Dow Jones)--Base metals on the London Metal Exchange pared losses going into the close but still ended lower Wednesday on disappointing U.S. economic data.
 

A record low in U.S. monthly new-home sales and a smaller-than-expected rise in U.S. durable goods orders hammered U.S. equities and metal prices upon their releases.

U.S. equities later pulled even on the day, with the metals following in their wake.
 

Copper fell to its lowest since July 27 and below both its 100-day and 200-day moving averages. It recovered to end 0.5% higher at $7,100 a metric ton, above both moving averages.
 

The selloff across the metals also sent lead and aluminum below key psychological supports. Aluminum recouped enough losses to end above support at $2,000/ton.

The poor U.S. data painted a dismal outlook for the economy. New-home sales in July fell 12.4% to 276,000, the lowest level since at least 1963 and well below expectations of 333,000. Durable goods orders for July rose 0.3%, slower than an expected 2.8% growth. The figures raised concerns that both consumers and businesses are cutting spending.

"Investors are losing confidence about the recovery in the global economy," said Commerzbank metals analyst Daniel Briesemann.

He predicted copper would decline toward $6,600/ton in the third quarter as the global economy slows.

The International Copper Study Group late Tuesday said the copper market was in a seasonally adjusted deficit of 37,000 tons in May. In the first five months of the year, the copper market was in a seasonally adjusted surplus of 46,000 tons, much lower than the 223,000 tons during the same period of 2009.

The world's biggest miner by market capitalization, BHP Billiton Ltd., Wednesday said the short-term outlook for commodities is mixed. Austerity budgets in Europe will inevitably curb growth, the miner said in its end-of-year results.

BHP said it foresees demand remaining strong for metals such as copper where inventories are not at high levels.

Prices in dollar a metric ton.

3 Months Metal     Bid-Ask        Change from
                                 Tuesday PM kerb
Copper          7100.0-7105.0        Dn 36
Lead            1961.0-1962.0        Dn 51
Zinc            1964.0-1965.0        Dn 26
Aluminum        2003.0-2004.0        Dn 25
Nickel         20080.0-20090.0       Dn 520
Tin            20350.0-20400.0       Dn 50
Aluminum Alloy  2045.0-2050.0        Dn 25
Aluminum Alloy  2028.0-2029.0        Up 3