Against the Grain

Metals walked with the general market - US$ down and DJI up so no surprise good gains in late London and Asian activity (London close cu 7000 with DJI off 10,200 and US$ 1.348). There is plenty of broad macro news pushing the market in all directions, the next step in Chinese economic policy; European sovereign debt and US growth and the health care.

The metals being dictated by above with very little impact from their own fundamentals. After a fortnight Shanghai weekly stocks saw cu jump 32,309 tonnes to 149,478; al up 10,425 tonnes at 370,678 and zn up 302 tonnes to 223,602. The LME stock highlighted by a rise in pb which translated into a 5 kt rise on the week, the others over that time, cu fell 5 kt; al off 23 kt; zn up 650 tonnes, ni down 1 kt and sn 1135 tonnes. The metals ebbed and flowed with the US$. The IAI reported total world al inventories rose 66 kt in Jan to 2.293 million tonnes (Dec 2.227 mill tonnes and Jan ’09 3.010 mill tonnes). A Chinese advisor to the State Council said the country should prepare to buy gold from the IMF when prices decline.

In Asia the Indian budget had no significant effect on metal trading and Q4 growth was reported at 6% yoy (Q3 7.9%) effected by a poor monsoon season. A flood of Japanese data, Feb manufacturing PMI was unchanged at 52.5, further the national Jan CPI fell 1.3% yoy (Dec -1.7%), Jan industrial production rose 2.5% (1.9%), yoy +18.2% (5.1%) and Jan retail sales up 2.9% (-1.1%) well above expected yoy +2.6% (-0.2%) yet large retailers’ sales fell 4.6%. Continuing Jan housing starts fell 8.1% yoy (-15.7%) with Jan construction orders rose 15.7% yoy (+0.6%). The Feb UK GfK consumer confidence survey improved to -14 (-17) as Feb nationwide house prices fell 1% (+1.4%) yoy +9.2% (+8.6%) and the Q4 GDP rise was revised to +0.3% (+0.1%). The Jan Euroland CPI fell 0.8% (+0.3%) yoy +1% (+0.9%).

The revised US Q4 GDP 5.9% (5.7%). Later in the afternoon the Feb  Chicago PMI was 62.6 (61.5) with the final Feb Uni of Michigan 73.6 (73.7) and Jan existing home sales -7.2% at 5.05 million units (-16.7% at 5.45 million units).

A quieter week cu down 360, al off 15, zn fell 170, pb down180, ni up 520, sn rose 150, gold down US$ 5 / oz, oil dipped US$ 0.2 / bbl, DJI off 100, US bond yields fell 0.19%, US$ / € down 0.001 and Shanghai index up 33 points.