london-metal

Video: LME’s Abbott Says Asia’s Commodity Demand `Structural’: Video

by on July 8, 2010

July 9 (Bloomberg) — London Metal Exchange Chief Executive Officer Martin Abbott talks with Bloomberg’s Rishaad Salamat about demand for commodities in Asia and the LME’s growth strategy in the region. The London-based exchange, founded in 1877, has entered talks with Singapore Exchange Ltd. on possible cooperation in Asia, according to a statement yesterday. The LME opened its first overseas office in the Southeast Asian city-state this year. Abbott, speaking from Singapore, also discusses regulation for commodity trading. (Source: Bloomberg)

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Video: LME’s Abbott Says Asia’s Commodity Demand `Structural’: Video

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Commodities Set for Biggest Drop in 13 Months on Concern Demand May Slow

by on January 29, 2010

By Claudia Carpenter Jan. 29 (Bloomberg) — Commodities headed for the biggest monthly decline in 13 months on concern that demand for raw materials may wane as governments take steps to control economic growth. The Standard & Poor’s GSCI Index of 24 raw materials is down 6.4 percent this month, the most since December 2008, led by slides of 17 percent for zinc and 15 percent for lead. Copper has lost 6.5 percent this month, also the most in 13 months, and crude oil is down 7.3 percent, the first decline since July. Sugar, feeder cattle and platinum climbed. Commodities last year rose the most in four decades, led by a doubling in copper, sugar and lead prices, as government spending programs spurred speculation that raw-materials demand would increase after the biggest slump in the global economy since World War II. Investors poured a record $92 billion into commodities last year, Barclays Capital estimates. “The optimism that led into 2010 has dried up very quickly,” said Jonathan Barratt , managing director at Commodity Broking Services Pty in Sydney. “Economies have been running off stimulus packages, not off genuine demand.” The Federal Reserve this week said it is taking steps to prepare investors for an end to stimulus. China started to restrict bank lending this month. Copper, Oil Copper for delivery in three months dropped $50, or 0.7 percent, to $6,848 a metric ton at 9:28 a.m. on the London Metal Exchange. Prices have declined 12 percent from this year’s high three weeks ago. Crude oil for March delivery was at $74.01 a barrel on the New York Mercantile Exchange, down 12 percent from this year’s high of $84.45. Commodities also have declined as the dollar strengthened, curbing investment demand for raw materials as an alternative asset. The U.S. Dollar Index , a six-currency gauge of the greenback’s strength, has added 1.4 percent this month after gaining 3 percent in December. Gold for immediate delivery fell 0.4 percent to $1,083.18 an ounce, down 1.3 percent this month. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, had dropped 1.9 percent this month as of Jan. 28, according to figures on the company’s Web site. Platinum, which is not in the GSCI index, has advanced 3.3 percent this month after an ETF fund was introduced in the U.S. Raw-sugar futures in New York have gained 8.6 percent this month as buyers including India, the world’s biggest consumer, compete for limited supplies. Feeder cattle, calves that are not ready for slaughter, have climbed 2.4 percent this month. Grain and soybean prices have declined this month after the U.S. Department of Agriculture raised its estimate of supplies. Corn futures have dropped 13 percent in January, wheat is down 11 percent, and soybeans have slumped 11 percent. To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

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Commodities Set for Biggest Drop in 13 Months on Concern Demand May Slow

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Aluminum Prices `Particularly Exposed’ as Clunkers Plans End: Chart of Day

September 10, 2009

By Claudia Carpenter Sept. 10 (Bloomberg) — Aluminum prices are “particularly exposed” to a decline because vehicle sales are likely to shrink as government “cash for clunkers” programs end, Standard Chartered Plc said. The CHART OF THE DAY shows aluminum rallied in June and July as a clunkers program drove U.S. sales to their first monthly gain since 2007 in August. The U.S. program ended last month. Germany’s 5 billion-euro ($7.3 billion) clunkers fund, the world’s largest, ran out of money a week ago. Car sales rose for a seventh consecutive month in August from a year earlier, the country’s main auto-industry association, VDA, said. “After a surge in car sales in many major countries, the next few months are likely to be disappointing,” Daniel Smith , a Standard Chartered analyst in London, wrote in a Sept. 7 report. “The U.S., in particular, is likely to fall back sharply in September.” Aluminum has gained 23 percent this year in London, rebounding from two consecutive annual declines. Supply of the metal will outpace demand this year and next, Barclays Capital said Aug. 18. Stockpiles in warehouses monitored by the London Metal Exchange have almost doubled this year, reaching a record 4.63 million tons on Aug. 20. Aluminum for delivery in three months will average $1,550 a metric ton in the fourth quarter, Smith forecast. The median of 15 analysts surveyed by Bloomberg is for an average of $1,639. The metal closed at $1,895 on Sept. 8 and averaged $1,821 so far this quarter. An average North American passenger car uses 319 pounds (145 kilograms) of the metal, according to the Aluminum Association in Arlington, Virginia. (To save a copy of the chart, click here.) To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

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European, Asian Shares Gain, Led by BHP; U.S. Stock-Index Futures Advance

September 8, 2009

By Daniela Silberstein Sept. 8 (Bloomberg) — Most European stocks advanced, Asian shares rallied and U.S. index futures rose as commodity producers climbed with metal prices and investors speculated that mergers will increase. BHP Billiton Ltd., the world’s biggest mining company, surged 1.8 percent as copper gained in London. Cadbury Plc added 1.8 percent on speculation the maker of Dairy Milk chocolates may attract competing offers after rejecting Kraft Food Inc.’s bid yesterday. Kingfisher Plc surged 3.9 percent after first- half profit climbed. Europe’s Dow Jones Stoxx 600 Index , added 0.3 percent to 237.91 at 8:35 a.m. in London as two stocks rose for each one that declined. A six-month, 51 percent rally has pushed the regional gauge’s valuation to 44.8 times profit , near the highest level since September 2003, according to weekly data compiled by Bloomberg. “The market has decided now that the recovery is around the corner, unemployment is not a problem, housing is not a problem, and we’re going to live happily ever after,” Andy Brough , a London-based fund manager who oversees $1.8 billion at Schroder Investment Management, told Bloomberg Television. “A lot of companies have produced reasonable numbers, like Kingfisher today, and you get a feeling that actually companies have performed pretty well.” The MSCI Asia Pacific Index climbed 1.2 percent as Australian business confidence jumped to the highest level in almost six years. Futures on the Standard & Poor’s 500 Index rose 0.9 percent, indicating the gauge may advance after U.S. markets were closed for the Labor Day holiday yesterday. ‘Best Phase’ Credit Suisse Group AG strategists said investors should favor stocks over bonds and cash and forecast gains in equity indexes worldwide ranging from 12 percent for Europe and 23 percent for Japan through mid-2010 as the economy recovers. “This is the best phase of the economic cycle,” a team of strategists led by Andrew Garthwaite in London wrote today. “We do not exclude a period of near-term consolidation, given that some of our tactical indicators are sending a signal of caution. Yet, other indicators suggest it is too early to sell.” BHP Billiton rose 1.8 percent to 1,652.5 pence in London and Rio Tinto Group, the third-largest mining company, gained 1.9 percent to 2,511 pence. Copper, nickel, zinc and tin advanced on the London Metal Exchange. Newcrest Mining Ltd., Australia’s largest gold-mining company, surged 3.7 percent to A$33.75. Gold futures climbed to more than $1,000 an ounce in New York for the first time in more than six months as a weaker dollar and concern that inflation may accelerate boosted the precious metal’s appeal. Cadbury Cadbury, which soared 38 percent yesterday, increased 1.8 percent to 797 pence. The confectioner may attract suitors ranging from Nestle SA to Hershey Co. and sell for as much as $21 billion according to analysts. Credit Suisse upgraded Cadbury shares to “neutral” from “underperform” and lifted its price estimate to 800 pence from 575 pence. Kingfisher gained 3.9 percent to 225.5 pence. Europe’s largest home-improvement retailer said first-half pretax profit climbed to 285 million pounds ($467 million) to 290 million pounds. The company made 214 million pounds on that basis a year earlier. STMicroelectronics NV, Europe’s largest semiconductor maker, advanced 2.6 percent to 6.57 euros while Elpida Memory Inc., Japan’s biggest maker of dynamic random access memory, gained 5.4 percent to 1,225 yen. Prices of the benchmark 1-gigabit computer-memory chip climbed to $1.71 yesterday, from as low as 58 cents in December, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for the chips. Dassault Systemes SA rallied 4.9 percent to 37.38 euros. Deutsche Bank AG raised its recommendation on the company, whose design software is used by Toyota Motor Corp. and Boeing Co., to “buy” from “hold.” To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net .

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Alcoa’s Kleinfeld Raises Aluminum Consumption Forecast on Chinese Demand

September 2, 2009

By Rob Delaney Sept. 3 (Bloomberg) — Alcoa Inc. Chief Executive Officer Klaus Kleinfeld raised his 2009 forecast for global aluminum consumption because of demand triggered by China’s stimulus spending. The largest U.S. aluminum producer expects China’s consumption of the lightweight metal to rise 4 percent this year, compared with Alcoa’s previous prediction of zero growth, Kleinfeld said in an interview in New York. That alters the company’s outlook for global demand to a decline of 5.5 percent from a previous forecast of minus 7 percent, Kleinfeld said. Alcoa is counting on economic-stimulus spending in China to boost metal demand enough to help the company return to profitability after three consecutive net losses. Chinese imports of aluminum and aluminum products almost doubled in the first seven months of 2009 compared with a year earlier, according to the country’s customs data. “China is back,” Kleinfeld said. “They had a lot of shovel-ready projects” planned for 2011, which the government is starting now in response to the global economic slowdown. “Also, the perceived deficiencies in the social network have been improved with the stimulus program, and that directly leads to people looking to upgrade from motorcycles to cars.” Asked for a 2009 earnings forecast, Kleinfeld declined to provide a number, saying only that stimulus spending in the U.S. and China would affect Alcoa’s results “positively.” The company is predicted to post a 2009 loss of 90 cents a share, the average estimate of 19 analysts surveyed by Bloomberg. Second-Half Forecast China’s second-half aluminum consumption will rise 8 percent from a year earlier, Kleinfeld said. Alcoa will be “free cash flow positive very soon,” Chief Financial Officer Charles McLane said on July 8, after reporting a second-quarter loss. Alcoa fell 1 cent to $11.58 at 3:41 p.m. in New York Stock Exchange composite trading on Sept. 2. The shares have declined 62 percent in the past 12 months. The Chinese government is spending 4 trillion yuan ($590 billion) to stimulate its economy, the world’s third-largest after the U.S. and Japan. “Without China, things would be much worse,” Luther Lu , an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Virginia, said in a telephone interview. Aluminum futures in Shanghai have jumped 16 percent since April 1, prompting smelters to restart idled capacity and increasing demand for alumina, a raw material. ‘Bullish Sentiment’ “For the aluminum price to get a meaningful recovery, you need the rest of the world,” Lu said. “When China’s demand is up, it certainly provides bullish sentiment for all commodities, and that will help Alcoa.” Aluminum on the London Metal Exchange has slumped 32 percent in the past 12 months as the global recession curbed demand for raw materials. The price has rebounded 20 percent this year after a record 36 percent decline in 2008. The U.S. recession “is bottoming out” and poised for “a slow return,” while Europe is “a mixed picture,” Kleinfeld said in the interview. “Outside of China, the recovery is nonexistent,” John Stephenson , who helps manage about C$1 billion ($910 million) at First Asset Investment Management in Toronto, said in a telephone interview. First Asset holds about 1 million Alcoa shares. Aluminum Inventories Aluminum prices may rise even as inventories monitored by the London Metal Exchange are near record highs because most of the stockpiled metal is locked into financial arrangements that make supplies inaccessible to users, Kleinfeld said. “Almost all of it is tied up in financing deals” creating short-term tightness in supplies, Kleinfeld said. The metal is tied up in so-called cash-and-carry trades, which let speculators sell forward futures when buying the commodity on the spot market. Aluminum inventories monitored by the LME have almost doubled this year to 4.61 million metric tons. To contact the reporter responsible for this story: Rob Delaney in Toronto at robdelaney@bloomberg.net .

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Nickel Price to Climb as Stockpiles Fail to Deter Funds: Chart of the Day

August 20, 2009

By Kim Kyoungwha Aug. 20 (Bloomberg) — Nickel, which surged 17 percent the past month, may advance further as “price momentum” and inflation expectations lure fund managers even as stockpiles of the metal approach a 14-year high, according to Commerzbank AG. The CHART OF THE DAY shows the price of nickel and open interest on the London Metal Exchange. The lower panel tracks inventories in metric tons. The price jumped to its highest level for a year on Aug. 13 and open interest was a record 147,117 contracts on Aug. 14, according to LME data. Stockpiles of the material used to protect steel from corrosion are close to the highest since 1995 amid weak demand in the construction and transportation industries. “I find the one-way, very dramatic price rise in all metals anomalous given the shaky fundamental basis and rising LME inventories,” Eugen Weinberg , a commodity analyst with Commerzbank in Frankfurt, said in an interview Aug 18. “The price momentum behind metals is so strong that the market is attracting external players.” Nickel for three-month delivery on the London Metal Exchange traded at $19,000 a ton at 10:45 a.m. in Singapore. The contract jumped to $21,325 last week, the highest since Aug. 22, 2008. Nickel is the biggest gainer in the past three months among 24 commodity contracts in the Standard & Poor’s GSCI Index. Shifting money into base metals also signals concern that inflation will build up, Weinberg said. The jump in open interest, the number of outstanding contracts, is an indication that fund managers are turning from cash or other asset categories into materials such as nickel on concern that $2 trillion of economic stimulus spending by governments worldwide will spark inflation and the U.S. dollar will decline, he said. The Dollar Index , which tracks the greenback against a basket of currencies, has fallen 12 percent from this year’s high in March. The dollar will weaken as a swelling U.S. deficit erodes its status as a reserve currency, according to Pacific Investment Management Co., the biggest manager of bond funds. (To save a copy of the chart, click here.) To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

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