Against the Grain

Light volume on Select overnight as cu and ni outperformed the moves in equities and currencies. The Shanghai weekly stocks saw cu rise 13,632 tonnes to 169,101; al increased 6779 tonnes to 394,328 and zn was unchanged 223,433 tonnes. As we forecast y/day LME al stocks are falling again and will continue to do so till the Apr third Wed the others unexciting. A mixed week overall cu off 10 kt; al jumped 93 kt; zn rose 1 kt; pb up 250 tonnes; ni fell 1220 tonnes and sn increased 300 tonnes. In China a blast has halted smelting at the state owned Dongxing al smelter in Gansu province (180 ktpa and planning to double). The metal consultancy Brook Hunt predicts a ni deficit of 10 ktbut returning to surplus the following three years (CRU also looking at a deficit). From Apr 1 China has a new rules on cu scrap importsrequiring imports to be based on international specifications. In an interview with Bloomberg Luvata, the maker of copper components expects demand to recover 10% this year after falling 24% on ’09, as consumer reduced inventories and substituted al for cu. The US accounts for 45% of their sales and Asia 30%.

Another very quiet pre market with continued firm equities supporting the metals and trumping the US$ strength. Then the equities got cold feet and the double D effect kicked in sending most prices back to unchanged on the week.

In Asia the Indian Reserve Bank raised rate to 3.5% from 3.25%, the first rise since Jul ’08 as inflation threatens. China  today unveiled its first domestically developed civilian helicopter. In Europe Feb German producer prices were flat (Jan +0.8%) yoy -2.9% (-3.4%). Then Jan industrial orders down 2.8% (Dec +4.7%) yoy +1.1% (+10.1%) with industrial sales +2.7% (+2.2%) yoy +5.1% (-2.5%).

No US data while Jan Canadian retails sales rose 0.7% (+0.4%).

Over the week cu +2, al +3, zn -47, pb -50, ni +790, sn +175, gold up US$ 4 / oz, oil down US$ 0.8 / bbl, DJI +110 points, US 10 year bond yield down 0.06%, US$ / € gained 0.025 and Shanghai rose 54 points.