Metals gain but seen vulnerable

Print this page Posted on : 11-27-2007 by recycleinme.com

Higher global equity markets and improved volumes lifted London Metal Exchange prices higher on Monday, but traders said the base metals remain vulnerable to sudden sharp moves in either direction with a sustained recovery not yet assured.

Some of the buying interest is coming from consumers, while several participants that have built short positions of late have started to cover an element of these as they grow nervous of being caught out, traders said.

This has helped lift LME copper 4 per cent from Friday’s low to $6,780 a tonne as of 1135 GMT. LME lead was up 6.3 per cent at $3,036/tonne and zinc is up 5.9 per cent at $2,340/tonne.

The gains in lead have come amid reports that China may once more increase its tax on exports of the metal, to 15 per cent from the current 10 per cent. But LME stocks are rising, and analysts said that there’s more metal available off-warrant than inventory data suggests.

BOOST FOR ALUMINIUM

LME aluminium received a boost from International Aluminium Institute data that showed a drop in world in ventories for October. Stocks fell by 87,000 tonnes on month to 2.782 million tonnes.

Yet traders said the momentum from the data will be short-lived, given that LME aluminium stocks are still some 244,000 tonnes higher than year-earlier levels.

As of 1135 GMT, LME aluminium was trading up 1.1 per cent from Friday’s low at $2,502/tonne.

Source : Business Line