As LME locals continued to fret over Chinese copper stocks and demand, technically-oriented CTAs and fund managers took weakening momentum and downbeat comments from Fed chairman Bernanke as a cue to liquidate again on Thursday. As we signed off yesterday aluminium had dived accordingly from 2830 to 2795, though consumer buying stemmed the fall and values had bounced back to 2822 in decent turnover. A second wave seemed almost inevitable before New York opened and it duly followed, with copper and zinc the greatest casualties. Aluminium this time fell to lows of 2772, just below the 100-day moving average located at 2780, but its recovery from there was impressive. Prices had been fairly flat over the past six weeks that saw others climb strongly, so the light metal had less far to fall. Word that China was set to raise export taxes again on some commodities seemed to underpin the market and prices sprang back to highs of 2838 in the afternoon sessions.
Nearby spreads narrowed somewhat overall with Aug-3m valued at $1.00b (Lvl) as buyers adjusted their purchases, while forward rates were only slightly softer with day-on-day valuations little changed. Only one holder remained in the 30-40% bracket of the LME’s latest WC warrant banding report.
The markets’ latest gyrations appeared to leave the LME fraternity rather exhausted and bemused on Friday morning. So far aluminium had traded between 2835 and 2807, though on only a dismal 1,000 lots as dealers took stock. Copper and zinc in particular had seen three days of selling from the medium- to long-term CTAs, fund watchers noted, though fundamentally little had changed, in spite of the hyperbole surrounding China’s surprise (copper) import data. Aluminium stayed firmly rangebound and while medium to long term uptrends were intact, the rate of ascent remained laboured, wrote Cliff Green Consultancy in a daily report. The trading strategists were stuck on the sidelines for as long as prices remained trapped, they said. Last at 2816.
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