Posted by Gilmour Poincaree on November 13, 2008

November 12, 2008

Article from: Reuters

The slide in copper and most other industrial metals in London and New York came one day after a Carvings on yellow copper. Cairo, 9th November 2008Chinese stimulus plan sparked a broad-based rally in the complex.

“The market is basically trading as if the Chinese package is not sufficient, at least not at the moment, to provide support,” said Jesper Dannesboe, senior commodity strategist at Societe Generale.

Copper for December delivery dropped US10.40 cents, or 5.9 per cent, to settle at $1.6480 a pound on the New York Mercantile Exchange’s COMEX division.

Yesterday, the metal — often seen as a key gauge of real economic activity — jumped more than 11 per cent to $US1.89 on China’s $US586 billion ($855 billion) fiscal package.

Copper for three-month delivery on the London Metal Exchange fell to a session low of $US3622 per tonne, before closing at $US3640. It also surged 11 per cent yesterday, closing at $3875.

At the end of October, it hit its lowest level in more than three years at $US3590 per tonne.

“I am not surprised to see base metals give up their gains today,” said Catherine Virga, senior base metals analyst with CPM Group in New York. “The fundamentals have not been strong with inventories up day after day, and broader market sentiment down.”

Stocks of copper in LME-registered warehouses rose another 4625 tonnes to 265,475 tonnes — their highest since March 2004.

In November alone, they are up more than 27,000 tonnes.

“We are increasingly of the view that the current environment is disastrous and that the market may not be factoring in how bad it is going to be over the next three months,” said analyst Max Layton at Macquarie Bank.

The World Bank slashed its 2009 economic growth forecast for developing countries and offered new financing of more than $US100 billion over the next three years to help them cope with the global financial crisis.

Also, Merrill Lynch chief executive John Thain said the global economy was in a deep slowdown and would not recover quickly, while the environment recalls 1929, the advent of the Great Depression.

China’s imports of copper showed a rise in October but analysts did not see the trend continuing near term.

The world’s top consumer of copper imported 231,212 tonnes of unwrought copper and semi-finished copper products, versus September’s 213,782 tonnes, customs said.

In the same month, China exported 47,622 tonnes of unwrought aluminium, down from 64,851 tonnes in September.

“We saw some arbitrage flows in September and October, and it’s one of the reasons why imports were firm,” said Yingxi Yu, an analyst at Barclays Capital.

CPM Group’s MsVirga agreed, adding that since the end of October the market had shifted to where the LME copper price regained its premium over the Shanghai price.

“The data since late October suggests weaker reported imports, especially for the month of November,” Ms. Virga said.

LME aluminium fell $US42 or 2.1 percent to $US1948, shrugging off announcements by a number of producers about plans to cut production or re-evaluate expansion plans.

Alcoa was the latest to cut aluminium production, announcing a 350,000-tonne-per-year global reduction.

Australia’s Alumina, a joint venture partner with Alcoa, suspended expansion plans for Australia’s Wagerup alumina refinery until market conditions improve.

Lead was down $US85 at $US1270 a tonne, tin dropped to $US14,150/14,200 from $US14,675 and zinc ended at $US1110 from Monday’s $US1100/1,105.

Nickel fell 6.7 per cent, or $US775, to $US10,725.





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