Metal hold to ranges in LME trade

Print this page Posted on : 11-29-2007 by recycleinme.com

The London Metal Exchange base metals were holding in recent trading ranges Wednesday but traders said the markets’ failure to move higher suggests prices would test support levels sooner rather than later.

Attempts to rally are failing, traders noted, with market participants still happier to sell into any rallies and add to short positions, than to cover.

As of 1236 GMT, LME copper was at $6,600 a tonne, up 0.4 per cent from Tuesday’s close zinc was unchanged at $2,385/tonne and aluminium was trading at $2,506/tonne also unchanged.

Expectations of a deterioration in the US housing market and the broader economy continue to weigh on sentiment and traders said this is now starting to be shown in consumption patterns.

Inventories in LME warehouses are rising, and while there is a hint of restocking by consumers, analysts note that the overall rate of demand has slowed.

Along with the broader financial community, metal market players are focusing attention on the continued announcements of bank trading losses and writedowns.

Analyst Philip Tyson of MF Global said that in the absence of any turnaround in sentiment, this drive to less risky assets classes alone looks set to prevent any upside correction for now.

Late Tuesday, Goldman Sachs downgraded the US base metals sector to “neutral’ from “attractive,” citing increased risk on metal prices over the next six months due to uncertainty over the macro-economic outlook.

Source : Business Line