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Aluminium climb to five-month high

Tuesday, Jun 09, 2009
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Aluminum prices climbed to their highest level since early January on Monday, as a rise in material tagged for delivery hinted at stronger demand and softened the blow of yet another record high in stocks. But copper led a sell-off in other industrial metals, as extended gains in the dollar versus the euro and a weaker tone in equities dragged values down. Copper for July delivery on the New York Mercantile Exchange's COMEX division slipped 3.10 cents to settle at $2.2530 a lb. On the London Metal Exchange (LME), copper for three-months delivery shed $10 to close at $4,980 a tonne. LME aluminum rose $50 to finish at $1,622. Earlier, the metal used in transport and packaging, hit a session high of $1,645, its highest since Jan. 7. Offering some respite in the over-supplied aluminum market, cancelled warrants - metal tagged for delivery - rose by about a third to 109,700 tonnes from 81,375 tonnes. But stocks jumped 38,075 tonnes to a record near 4.3 million tonnes. Aluminum prices are up 11 per cent so far in June, having been boosted the week before by two consecutive days of inventory declines - the first drawdowns since April 20. While some analysts suggested the cancelled warrants data offered hope that perhaps the worst of rising aluminum inventories is now over, doubts remained. "On Friday we saw some nervousness about the trend in stocks, especially on the cancelled warrants," said Edward Meir, an analyst at MF Global. "It's still not significant ... you are seeing production drop but way less than what demand is down by." "We saw the same thing happen six weeks ago and we had a $200 correction from those highs, so I wouldn't read too much into this." The economic downturn's crushing effect on the auto sector has battered aluminum demand, but a recent series of improving economic data has also helped support prices. Last week's better than expected US jobs data has reinforced perceptions that the recession could be easing, which could in turn signal a better outlook for industrial metals demand. "I think the copper market is choosing to focus on some of the positives right now," said Michael Gross, futures analyst with Optionsellers.com in Tampa, Florida. "The unemployment data on Friday was certainly supportive as well as (demand) signs out of China." Last week, the metal used in power and construction hit a 7-1/2-month high of $5,145 a tonne in London and $2.3530 a lb in New York following better data. "The market will be very sensitive to any type of economic data that comes out over the next couple of weeks," Gross said. "This week there will probably be a lot of focus not only in the dollar but what crude oil prices are doing. A lot of people are using oil prices as a gauge for commodity prices as a whole." A sovereign downgrade for Ireland and further gains in US Treasury yields drove the dollar to a near-two week high against the euro on Monday, denting non-US investment demand for dollar-priced commodities. "In the absence of a clear trend, the base metals are again looking towards the FX markets for direction," said Standard Bank analyst Leon Westgate. "A stronger dollar has put much of the complex under pressure ... aluminum continues to build on its recent strength and appears to have temporarily broken free from the other metals." Zinc closed at $1,545 from $1,565 on Friday, battery material lead ended at $1,669 from $1,670. Tin closed at $14,900 versus $14,775 and nickel at $14,300 from $14,500. source:news.theage.com.au

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