  | |
| |
 |
|
| ||
Metals correction may continue Posted: Fri, 16 Mar 2007 [miningmx.com] -- ECONOMISTS say it's too soon to pencil in a sustained metal market recovery despite improvements in commodity prices. "The market will remain extremely volatile for the foreseeable future," said Nico Kelder, an economist at The Efficient Group. "Most analysts agree that global markets are overbought and with all the uncertainty surrounding the US economy, backed up by fears over Iran and measures to cool Chinese economic growth, the market is pouncing on any signs of hope at the moment." Copper futures for May deliver surged 4.4% to $2,949/lb on March 15 on the New York Mercantile Exchange - their highest level in almost five months. Copper prices are widely used as a barometer for global economic health due to the metal's widespread application in industrial manufacturing. Metals management company, Scott Brass, said copper was due for an upside technical correction and could reach $3/lb soon after breaking through the key $2.90 resistance level, according to a Bloomberg News report. Meanwhile the nickel price rose to a fresh record of $45,200/tonne on the London Metals Exchange (LME) as stockpiles of the metal dropped 5.8% to 3,594 tonnes, equivalent to less than two days global consumption. Nickel stockpiles are reported to have slumped 45% this year on surging Chinese demand for stainless steel. Kelder said uncertainty would continue to plague financial markets for some time to come. "Fears about the US sub prime mortgage market are really fears about the US consumer." "If US consumers are having trouble repaying debt then they're likely to have trouble spending too. Considering that US consumer spending contributes around 25% to the global economy, if the US consumer stops spending it's not hard to see what will happen to the world economy," he said. Commodity traders have a different view, however. "Copper inventory levels have been declining across Asia as well as in the US, while demand has remained buoyant," one trader told Miningmx. "As such the fundamentals for copper look good and this will provide strong support for resource stocks like Anglo and BHP Billiton as copper is a significant profit driver for these stocks," the trader said. Another trader said nickel was comfortably positioned "in the vertical stage of the demand curve". This was owing to constrained supply in the face of robust Chinese demand for stainless steel, of which Nickel is a major constituent. The Chinese National Bureau of Statistics announced recently that the country's industrial output rose 18.5% in January and February - the fastest growth rate in eight months. Click Here to subscribe to our daily newsletter
| |||||||
