TIN HOLDS $16,000 BUT MAY TEST 27-YEAR PEAK AGAIN Profit-taking was seen in tin, but the market held near $16,000, ending at $16,050, down $125.
After weeks of sideways trading around the key $15,000 level, tin finally broke higher on Wednesday, hitting a two-month high at $16,201 during after-market hours. Analysts said the metal could re-test its 27-year high of $17,050 set in August, buoyed by a combination of a tight concentrate market, reduced supplies from the world's two largest supplies, China and Indonesia, talks of a potential tin export quota in Indonesia and declining LME stocks -- they fell 135 tonnes today to 13,685 tonnes. "We continue to be positive on tin price prospects and believe further price gains are in the offing as the tin supply side continues to be problematic," Norrish said LME CLOSE Markets under the cosh, rally on hold as investors take profits By Martin Hayes - Senior Correspondent, <mailto:[EMAIL PROTECTED]> [EMAIL PROTECTED] (+44(0)20 7929 6339) London, 04 October 2007 - Base metals remained under pressure during late Thursday trading on the LME, despite half-hearted attempts to stage a recovery based on dollar-weakness, which were outweighed by profit-taking prompted by this week's rally. "Some of the CTAs had a good September and have been taking a few profits now," a source at a systems-based CTA said. There was also some caution ahead of Friday's key jobs report in the US and before the much-awaited LME week. "We are slightly lower across the board on general profit-taking, with very thin volumes once again evident," Edward Meir, analyst at MF Global, said. Among the high-fliers, copper re-traced from Wednesday's five-month highs, shedding 1.2 percent, lead, after touching a fresh record high in early trade, slipped back as well, while tin, around two-month peaks late in the previous session, similarly eased. The dollar fell late on Thursday, snapping a three-day rally after worse-than-expected US factory orders fuelled expectations of another interest rate cut by the Fed at the end of October. In Europe, the ECB and the BOE kept interest rates unchanged today, at 4.00 and 5.75 percent respectively. Key for dollar sentiment is tomorrow's US non-farm payrolls data for September, which is expected to rise by 94,000. Today, as a precursor, weekly jobless claims came in at 317,000, versus expectations of 310,000, an outcome that had little impact. COPPER STALLS, LEAD REBUFFED AT ALL-TIME HIGHS Copper eased by $100 to $8,200 a tonne, having climbed as high as $8,315 the day before, its highest since May 4, when it reached its 2007 peak of $8,335. LME inventories rose by 700 tonnes to 131,625 tonnes, but nearby supply remained tight, with over 90 percent of all copper warrants held by a single party. The cash/threes backwardation remains at a wide $70/80. "Copper needs to break $8,375-8,380 technical congestion for $8,400. Till then there will be more sellers than buyers," consultants Insignia said. A strike by workers at Southern Copper in Peru entered its second day, affecting the Cuajone and Toquepala mines which produce 370,000 tonnes of copper annually, and the 350,000-tonne Ilo smelter, but the government said it was trying to cajole both sides to negotiate a new wage contract. Lead fell back to $3,605/3,610, down $35, after setting an early fresh all-time high of $3,655. Like copper, lead is in the midst of a supply crunch, with more than 90 percent of warrants controlled by a single party, said to be a bank. In the earlier rings, however, availability emerged, however. TOM/next (tomorrow/next day) started out offered at $3.00 backwardation, but was aggressively offered in to eventually trade at $2.00 and $3.00 contango, while LME compliance officials monitored ring activity today. The cash/three backwardation stood at $110/90 from $99 on Wednesday. Inventories fell by just 50 tonnes to 22,300 tonnes, but remained near their lowest since 1990. "One or two people have got all the lead stocks, one particular bank in fact, and they are not going to release them. As long as they keep it liquid in the nearbys, the LME won't interfere and I think they will continue to do that," another trader said. Dealers said a slew of supply side disruptions are underpinning the market, the latest of which being the loss of production at Xstrata's Mount Isa lead-zinc concentrator due to a fire last week. A ban on exports of lead concentrate from the Australian port of Esperance due to birds poisoning continued to lend support. "We continue to view lead prices with an upside bias in light of the market's compelling fundamentals and anticipate further price gains and hold a short-term price target of $4,000," Kevin Norrish of Barclays Capital said. TIN HOLDS $16,000 BUT MAY TEST 27-YEAR PEAK AGAIN Profit-taking was seen in tin, but the market held near $16,000, ending at $16,050, down $125. After weeks of sideways trading around the key $15,000 level, tin finally broke higher on Wednesday, hitting a two-month high at $16,201 during after-market hours. Analysts said the metal could re-test its 27-year high of $17,050 set in August, buoyed by a combination of a tight concentrate market, reduced supplies from the world's two largest supplies, China and Indonesia, talks of a potential tin export quota in Indonesia and declining LME stocks -- they fell 135 tonnes today to 13,685 tonnes. "We continue to be positive on tin price prospects and believe further price gains are in the offing as the tin supply side continues to be problematic," Norrish said. Aluminium continued to correct lower after bumping into strong resistance around $2,500 this week, falling back again to end 2.4 percent, or $59, below Wednesday at $2,423. "The fowards are being lent all the time, and aluminium is a problem case now. It is one you sell on rallies," the fund source said. In other metals, nickel eased $625 to $30,800, despite a 36-tonne inventory decrease to 32,928 tonnes, as the stockpile remains very close to the highest since March 2006. Zinc dropped $85,or 2.7 percent, to $3,025, ignoring data showing stocks fell by 250 tonnes to 60,025 tonnes, the 17th successive daily decline and a fresh low since March 1991. (Additional reporting by Perrine Faye) <http://www.basemetals.com> BaseMetals.com <mailto:[EMAIL PROTECTED]> [EMAIL PROTECTED] 12 Camomile Street London EC3A 7PT t: +44(0)20 7929 6339 f: +44 (0)20 7929 2369
