Against the Grain

The US equities put in a good move y/day DJI +4.7% and this was followed by similar moves in Asia - Nikkei 2.5% and ASX 3.9% however the base metals were far more cautious as Shanghai cu and zn fell the 4% limit. Weighting on the mood in metals was China’s biggest steelmaker, Baoshan Steel decision to cut prices for the third straight month, reducing them by as much as 20 percent, as an economic slowdown forces carmakers and builders to slash orders. Oil pushed higher as an OPEC meeting approaches Thurs with expectations that they will cut output in a reaction to the recent price sell off. In the past 24 hours two Canadian ni mining operation closures have announced; FNX Mining will halt mining at the Levack deposits at the end of the year and First Nickel Inc will suspend activity at its Lockerby mine both in Ontario. In the UK the Oct CBI manufacturing output survey fell to -31 the lowest level since Jul ‘90 (Spt -16) this saw £sterling fall below 1.70 to the US$. The LME dominated by cu down 6500 tonnes with the material out of Korea and al up 7325 with US 3975 and Sing 3500. The stock move saw cu gain ground taking the others with it in light activity as a stronger US$ and softer oil providing a drag. Reuters is reporting a Chinese copper and semi finished products maker has cut output as demand falls. It is reported from Australia that OZ Minerals is reviewing operations at its Century zinc mine, the second largest in the world yielding 130 kt of contained zn and 18 kt of contained pb.

The official rings saw the metals under sustained pressure with cu below 4500. While the European equities moved higher  at the opening call the US pointed to a lower DJI sending the former eventually lower, despite a stronger US$ and weaker oil the metals held their lower level well – cu 4450, al 2104 with ni higher on mine closure news. Little economic data around so equities could set the trend this afternoon and they did, the DJI opened lower with cu at 4430 then rallied into positive territory sending cu to 4580. The equities, US$ and oil now have a gravitational pull on the metals. The Spt Chicago Fed national activity index fell to -2.57 on a steep drop in the industrial production reading (Aug -1.61). About the afternoon rings the DJI lost its shine with predictable results for our sector.

Amazing stats even in these times the Argentinean government bond 8.25% coupon maturing 2033 is yielding 24.77% up 4.3% on the day ahead of presidential economic statement while the Baltic dry freight index has fallen 88% since Jul.