This market comment was written at 7:10 a.m. on April 11th, US east coast time.

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Joan Ward
5 years ago
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1 LME Officials as Vol Op/Int Of April 10 th close High Low Close Csh/3 STOCKS (CH) SUP RESIS RSI 000 (000) MAV MAV MAV 3 Month Copper , Month Alum , Month Lead , NA Month Zinc , Month Nickel , Month Tin , Month Nasaac , NA NA This market comment was written at 7:10 a.m. on April 11th, US east coast time. We had another strong day yesterday, although by the end of the session, most markets closed off their best levels. Nevertheless, copper prices hit seven-month highs, while aluminium raced to an 11-month peak. Tin, lead, and nickel all hit record highs at various points in the days, and zinc closed up strong as well. No rest for the weary this morning either, as we are off and running once again. Copper is taking the lead, up a staggering $210/MT, and closing in on the $8000 level. The rest of the group is also up, but much more modestly. We wrote yesterday that copper s run could extend into another day if the $7700 level was taken out, and we very well could be seeing this second extension this morning. However, we would be very leery about jumping in on the long side at this stage. Wirth copper s RSI at a frothy 80 (this as of yesterday, no less) the complex is quite overbought and prone to a setback. Moreover, the inability of the rest of the complex to rally as sharply makes the argument for standing aside even more tempting. Nevertheless, we are not necessarily calling for a copper top here, as we realize the run could continue, perhaps until the $8200 level, which is where next major resistance lies. However, entering at these levels is not worth the higher chance of getting stuck in a rather sharp correction. More importantly, if long, we would suggest reducing some length. In macro news, no major releases are out today, but an interesting Bloomberg poll caught our eye yesterday. Six out of 10 Americans expect a recession within a year, similar to the 64% who anticipated the economy would contract in a December 2000 poll. Additionally, 57% percent of those surveyed disapproved of Bush's handling of the economy, while 38% approved, the president s worst showing in eight months. Another 57% said the economy was nevertheless doing well, although this was down 11% from January. Not exactly the kind of sentiments that lie behind commodity bull markets -- if realized, of course.

2 COPPER SUPPORT: $7700 RESISTANCE: $8200 We are currently at $7930, up $210/MT, as the breakout yesterday above $7700 generates momentum into a second day. As we wrote earlier, the current run could extend to the $8200 level, but odds are greater that a correction sets in before we get to such levels. Stocks were down again today on the LME, perhaps contributing to the bullish mood, but worldwide stocks are not decreasing as dramatically, and makes looking at the LME slice somewhat misleading. * Chile's Codelco said it reached new contract agreements with two unions at its Salvador division representing some 900 workers. The agreements include a 3% salary increase and additional bonuses. In a related item, the company s subcontract workers plan to march tomorrow to protest what they say is the company's failure to live up to past agreements on work conditions and wages. Assemblies across Codelco's five divisions will be held in the morning, and a march is scheduled for later in the day, but there is no talk about production being stopped.

3 * Ivanhoe Mines said it reached an investment agreement with the Mongolian government on the Tolgoi gold and copper project in the South Gobi Desert. No details on the agreement were released, but the company said it is still subject to review and approval. ALUMINUM SUPPORT: $2670 RESISTANCE: $2875 Ali has had a good run of late, but has turned somewhat sluggish once it attempted to break out above the $2900 band. Prices are now hovering at $2904, up $29. We still would like to see two consecutive closes above $2875 (prices closed at that level yesterday) before making a change to our trading bands. A strong ali outlook was given by Alcoa yesterday, (see below), but the company's revised forecast calling for a surplus next year could be limiting today s gains. * Alcoa said yesterday that first-quarter profits hit their best level ever, (up 9%), driven by higher prices and strong demand from its aerospace and industrial customers. Metal production rose to 899,000 tons from 867,000 tons in the quarter, while shipments rose to 518,000 from 488,000 tons. Alcoa said production of alumina was down 4% because of lower shipments, the impact of a strike in Guinea and a stronger Australian dollar. On the demand side, world demand for aluminum will rise about by 7.7% this year, this according to CEO Alain Belda. Chinese demand and production will likely rise 23%. Alcoa is also forecasting a 300,000-ton aluminum surplus this year, compared with an earlier analysis of a ``balanced'' market. That surplus should shrink to about 200,000 tons in 2008, as producers struggle to keep up with demand. * Workers at the U.S. unit of Britain's Rexam went on strike yesterday at nine plants after the company rejected their contract counterproposals to replace labor agreements that expired on February 24. * Xstrata said today that it was selling its aluminium business to equity firm Apollo for $1.15 billion cash, using the money to possibly make further acquisitions. Xstrata acquired the business through its purchase of Falconbridge last year, but said "Our review concluded that these assets do not provide Xstrata with the necessary scale or upstream exposure to represent a suitable entry point from which to build a world-class aluminium business,"

4 ZINC SUPPORT: $3400 RESISTANCE: $3670 Zinc is at $3620, up $70, and moving towards the $3670 level. LEAD SUPPORT: $2000 RESISTANCE: NA We are currently at $2,026/MT, up only $6/MT, but are still capable of moving higher. NICKEL SUPPORT: $41,000 RESISTANCE: $50,000 Nickel is being hemmed in by the $50,000 level, giving up its gains every time it crosses over this mark. We may back and fill for a little while longer around $50,000, but the trend still seems to be higher still. We are currently at $48,350, down $50/MT. * China will remove export rebates on most types of steel products and reduce the rebate on more value-added products to 5%, effective April 15, the China Iron and Steel Association said. The move was largely expected. China exported 5.38 million tons of steel products in March, up from February's 4.38 million, while steel product exports rose a whopping 118% to million tons in the first three months of this year. TIN SUPPORT: $14,000 RESISTANCE: $15,000 Tin is now at $14,350, up $200/MT, rather restrained today, but still capable of pushing higher. * Bolivia's mining minister said Tuesday that a two-month halt in tin exports was not due to legal action initiated by Glencore, but rather due to administrative snags that will be worked out shortly. The minister denied media reports that Glencore had vowed to confiscate Bolivian tin

5 exports or that it was seeking $20 million in compensation over Vinto. "We're going to initiate talks with Glencore... but I want to let you know that this is not happening, we know nothing about confiscating (exports) and nothing about the $20 million.. The minister added that he expected to exports about 1,575 tons over the next few weeks to various buyers. (Our experience in the physical business suggests that buyers will be very reluctant to contract for Bolivian tin knowing that cargos could be impounded by court orders).

LME Daily Metals Report

LME Daily Metals Report As of 9/7 CU AL PB ZN NI SN NAA High LOW CLOSE CSH/3 LME STOCKS - CH SUP RESIS RSI VOL O/I ( 000) 10 40 100 MAV MAV MAV 5208 5081 5148 15 346200 (-6125) 4855 5363 49 38,030 329 5093 5227 5689 1627 1595