MARKET ROUNDUP
Industrial metals futures ended higher on Tuesday but off session highs as a late bout of risk aversion capped momentum and left prices vulnerable to further losses as sovereign debt issues in Europe continued to grip the broader market.
IN FOCUS
- Jing Chuan, chief researcher for Great Wall Futures, said he expected many end users to start building extra stocks of Copper at the 51,000 yuan level. He noted that some end users had already increased purchases in the futures market this week for physical consumption.
- China Steel, Taiwan's top steel maker, sees the price of iron ore rising 30-50 percent in the next quarter, its president told in an interview, while taking a swipe at "greedy" suppliers.
- Collahuasi, which produces 3.3 percent of the world's mined copper, resumed operations after subcontractors lifted a blockade to the mine on Wednesday last week.
- Shares in US aluminum producers Alcoa Inc and Century Aluminum Company rose sharply on expectations the metal's price could rise if Chinese electricity price increases reduce the global supply of aluminum.
- Electricity is the major power source for aluminum smelting and the analysts suggested some Chinese smelters could go out of business if the power price goes up. That would affect the global supply of the metal used in auto and aviation manufacturing, construction and household appliances.
- The increase, posted on the National Development and Reform Commission's website, said that the affected companies were mainly in the aluminum, cement, steel, zinc, ferroalloy, calcium carbide and sodium hydroxide sectors.
- China government's decision to raise electricity rates for manufacturing sectors including aluminum production, could threaten closure of up to 2.7 million tons of capacity, will increase production costs by up to $110/ton, says Barclays Capital.
FUNDAMENTAL OUTLOOK
Industrial metals trimmed losses on Wednesday after an initial sell-off fueled by the euro's slide to fresh four-year lows against the U.S. dollar, as investors scoured the market for bargains. Metals may witness some gap up opening; any upside in Metals should be considered as a good selling opportunity today.
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