Against the Grain

Metals faced a shutdown with China and the North American markets in holiday mode, this was reflected by the extremely low Select turnover. If the metals fell a fortnight ago on the emergence of fundamentals with tightening spreads it seems the financial players have regained their composure and could walk these markets relentlessly higher again. However the path is not as risk free as in ’09 as the direction of official interest rates turn up.

A bright spot was Japanese Q4 GDP that rose 1.1% (Q3 0%) yoy 4.6% (Q3 0%). The recovery was fuelled by exports and overseas earnings as consumer spending that accounts for over 50% of the economy rose 0.7%. For instance Panasonic saw flat panel TV sales rise 48% yoy driven by Chinese and South American demand. The Dec Japanese industrial production rose 5.1% (Nov +2.2%). Two interesting articles on commodities if you have time, in the FT 15/02 a good argument on their place in the investment pyramid by John Plender “Commodities: Delivery due”, http://www.ft.com/cms/s/0/473ce3ee-199b-11df-af3e-00144feab49a.html and from BBC Radio 4 the IPlayer has stored a report by Mark Miodownik exploring the supplies of a host of important metals - http://www.bbc.co.uk/iplayer/episode/b00qjx5q/Out_Of_This_World/ .

The LME stocks saw good rises in cancelled warrants in al (Chicago 9 kt) and cu (Busan 1.3 kt and Rott 3 kt). This took cancelled warrants to 6% in al, cu 3% and pb still 9% in the US and not moving out. It is Feb third Wed which sees the focus back on al stocks and whether the now usual monthly warrant slues gates are opened. The early pre market trading was a case of follow the US$ with an early bias to the upside no surprise as suspect more support for the € this side of the Pond. This currency watch continued throughout the day with low volume firm support for zn and pb. The Zambian ’09 cu output was 698 kt up 14% yoy. Ni the star performer up nearly US$ 1000 / tonne as this tightly held metal catches the unwary.

Apparently in the US an mystery billboard appeared at the side of a highway outside Wyoming, showing a picture of George W and the words “Miss me yet?”. In the US the individual States are beginning to roll out the US$ 300 million Federally funded “cash for appliances” programme, the rebates range between US$ 50 and US$ 250. We suspect London traders took an extended weekend with China and US out if not the Select volume might give a worrying insight into the state of European traders.