Market Dynamics
Aluminum Rises as Copper Falls After ECB Rate Statement
Time: 2014-06-11 Source from: vinachem
Aluminum rose in London on buying that followed the biggest drop in almost three weeks and amid signs Indonesia will keep barring ore exports. Copper fell after the European Central Bank said it will charge fees on deposits.
Aluminum lost as much as 1.7 percent yesterday, the most since May 15, as industrial metals fell amid reports of a probe into warehousing at the Chinese port of Qingdao. Indonesian presidential frontrunner Joko Widodo will maintain an ore-export ban that lifted nickel this year if he wins the July election, a policy document showed. The ban also affects aluminum because Indonesia supplied more than 10 percent of the world's bauxite, used to make the metal, according to Goldman Sachs Group Inc.
"The fundamentals are clearly heading in the right direction," Nic Brown, head of commodities research at Natixis SA in London, said by e-mail of aluminum. "The market is shifting from a chronic surplus to a modest deficit."
Aluminum for delivery in three months added 0.6 percent to $1,846 a metric ton by 1:20 p.m. on the London Metal Exchange. Yesterday's slump "offers a good opportunity to pick up material at attractive prices," Brown said. Inventories tracked by the exchange fell for a 21st session in 22 to 5.17 million tons, the lowest since May 13 of last year, data showed today.
The euro weakened as much as 0.3 percent against the dollar after the ECB became the first major institution to charge fees on deposits and said it will take more steps to boost the economy. A stronger U.S. currency tends to sap demand for commodities as an alternative investment.
"A lowering of the interest rate and possible QE would mean potential for a softer euro and thus a stronger dollar, which should be negative for commodities," Bjarne Schieldrop, chief commodity analyst at SEB AB in Oslo, said by e-mail before the announcement, referring to so-called quantitative easing.
Copper for delivery in three months lost 0.3 percent to $6,762 a ton on the LME. The metal for delivery in July fell 0.4 percent to $3.082 a pound on the Comex in New York.
LME copper stocks, down 54 percent this year to the lowest level since August 2008, declined 0.3 percent to 167,925 tons.
Nickel and zinc gained on the LME as tin slipped. Lead was little changed.