Against the Grain

With very little change in the macro picture cu pulled back overnight as the largest cu producer in China, Jiangxi, repeated what Tongling Nonferrous said in early Mch, the country’s cu demand will slow this year as the government cuts spending on the power industry by 25% (the industry accounts for 45% of the country’s usage).

The news above took the edge off other metals except ni and sn then in London the US$ weakened a tad and metals recovered. The LME stocks were back to routine, over Q1 cu stocks have risen 2.4%; al dipped 0.6%; zn rose 11%; pb jumped 20%; ni off 1% and sn down 9%. In Peru workers are planning a strike the Freeport Cerro Verde cu mine could see it called unlawful. The poor US Mch ADP employment data below saw the US$ weaken above € 1.35 and boosted metals (cu to ’10 high) and gold.

In Asia Japan’s Mch manufacturing PMI was 52.4 (52.5), with Mch small business confidence at 45.8 (42.3) and Feb housing starts down 9.3% yoy (-8.1%) with construction orders falling 20.3% (15.7%). The South Korean Feb industrial production rose 3.6% (Jan unchanged). In Australia after several rate rises Feb retail sales fell 1.4% (Jan +1.1%) with building approvals off 3.3% (-5.5%), yoy +34.2% (52.7%). The Mch UK GfK consumer confidence dipped to -15 (Feb -14). The Mch German unemployment declined to 8% (8.1%) while Feb Euroland unemployment up to 10% (9.9%).

Overnight the US weekly ABC consumer confidence retreated further -45 (-44). The weekly MBA mortgage applications rose 1.3% (-4.2%). The Mch ADP private sector employment survey was a shock registering a fall of 23 k (Feb -24 k), it was expected to be in the black at +40 k and suspect will see some hurried re evaluations of the estimates for nonfarm payrolls Fri estimated at 190 k area. Then the Mch Chicago PMI disappointed 58.8 (62.6), Feb factory orders up 0.3% (Jan revised to +2.5% from +1.7%) with durable goods revised to +0.9% from +0.5% and Milwaukee NAPM jumped to 62 (56.0). Finally we got the weekly DoE crude oil inventories that rose more than expected but if anything like LME metal stock are not in the present investment mix. With the US$ weakening the metals settled into some solid end of month / quarter window dressing.

At 17:00 the ups and downs of the quarter have been; cu rose 5.5%, al up 4%, zn down 8.5%, pb fell 11.5%, the winner is ni jumping 33%, sn rose 8.5%, gold +1%, oil +4.5%, DJI +4.5%, US$ / € +5.5%, bonds unchanged and Shanghai equities up 10%. As an aside sugar that hit a 29 year high mid Feb is down 34%, while non exchange iron ore and coal have posted significant rises.