Against the Grain

As quite often happens after a period of dormancy cu sprang into life in Asia rising over US$ 150 from Fri close joined by ni that charged US$ 800 higher. Suspect the reasons were a combination of currency (US$ weaker); Shanghai / LME arbitrage (better Select volume); we are entering the end of month window dressing and anticipation of US employment data Fri (Good Fri - most of Europe is closed so expect “real fireworks”, you could see cu move US$ 200 in any direction – as usual when one or more exchanges are closed traders take advantage, and Mon!) and finally an 6.2 earthquake in northern Chile with no damage reports to cu production (at time of writing). It must be remembered the production facilities in the region have been constructed and operated with a quake threat in mind.

The metals struggled to move in early London but suspect the momentum is upwards. The LME stocks routine with most significant moves being rises in pb (Hamburg) and ni (Rott). In China overnight four Rio Tinto iron ore division employees were found guilty and sentenced to long jail terms. In cu European producer Boliden has entered a three year contract to sell China’s Minmetals 36 kt. The ni rally took place as BHPBilliton said its Kwinana ni refinery has restarted after a 10 day closure. In pb / zn the Yunnan province drought story is gathering press momentum since it broke a fortnight ago. The US opened with stop loss buying pushing cu over 7700, as they blaze their own trail ahead of the US$.

On the data front all eyes are on the US and Fri. In Japan Feb retail sales rose 0.9% against an expected fall (Jan +2%), yoy +4.2% (+2.3%). The Feb Australian new home sales fell 5.2% (Jan +9.2%). The Euroland Mch economic confidence improved 97.7 (95.9), industrial confidence -10 (-13); service confidence unchanged at 1; consumer confidence unchanged at -17.

US data is back to the normal time as our clocks moved, at 13:30, Feb personal income unchanged (+0.3%), personal spending rose 0.3% (+0.4%) and savings declined to 3.1% the lowest since Oct ’08. Saw an ad in the NYT were the financial group’s selling point was “144 years without government bailout money”. The afternoon saw the metals track higher as it becomes clear there is money to invest and if the economic outlook is poor the metals are a good safe haven and if things look good then demand for metals will rise – a win, win situation (cu finished on its high up US$ 275 from Fri close).