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Metal Recycling News May 13, 2011 09:38:03 AM

Metals untouched by China rate hikes, focus on positive data

Paul Ploumis
ScrapMonster Author
In an attempt to curb the rising inflation in China, it was the fifth time this year that the Chinese government hiked its rates. Being the top consumer and most consuming country of base metals China's policies have always been a regulator of global metal prices

By Truemon T A

LONDON (Scrap Monster): In an attempt to curb the rising inflation in China, it was the fifth time this year that the Chinese government hiked its rates. Being the top consumer and most consuming country of base metals China’s policies have always been a regulator of global metal prices, but this time the market was more optimistic focussing on the glimpses of a global recovery.

On Friday copper prices was more focused to U.S consumer price data for April due later on the day and European growth rates than the China factor. Copper rebounded from Thursday’s drop ahead of U.S data and positive growth reports from Euro region. GDP in the euro area gained 0.8 percent from the fourth quarter, according to the European Union’s statistics office.

A rate hike from Chinese government could have actually pulled the prices down but unlikely this time we could see that the subdued copper rebounded on Friday. A metal expert opined that this wasn’t the first time that the market was unhurt by the China move, earlier in April and so the market was prepared to take it and didn’t make much vibes.

According to many analysts, it was largely expected by the traders, and such move from China didn’t come as a shock so that it could hit the markets.

While a few traders of the metal opined that bargain hunting was another major reason which kept the copper prices intact. At the same time a technical pullback was evident in such a stage of trade as copper was a bit down from almost hitting a saturation point in the mean time.

Poor performance by dollar is said to be another factor which helped copper and other metals rebound as investors found more scope in metals. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.6 percent, spurring demand for commodities as an alternative investment.

Hamburg-based Aurubis, the largest European copper smelter reportedly told bloomberg that inventories in major futures trading bourses will be a critical indication of the future market trend, along with the strength of physical demand.

Copper for three-month delivery gained $126, or 1.4 percent, to $8,856 a metric ton by 10:25 a.m. on the London Metal Exchange. Prices rose as much as 1.9 percent, the most since April 28. The metal for July delivery increased 1.2 percent to $4.0185 a pound on the Comex in New York.

Aluminum for three-month delivery on the LME advanced 0.2 percent to $2,620 a ton, zinc increased 2 percent to $2,185.75 a ton and lead gained 1.2 percent to $2,336 a ton. Nickel climbed 0.8 percent to $24,735 a ton and tin increased 0.3 percent to $29,400 a ton.

Copper support was seen at $8,470 a tonne and resistance at $8,990. The 14-day RSI was at 26.90.

Though the rates didn’t mark many fluctuations in the meantime, a few experts opined that this could impact the market on a longer term, creating a tightening later on in the year end.

 

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