Rate cut moves by the central banks wononly muted market support

Tag : lead,copper
Industrial metals rebounded on Thursdayafter this week's sharp falls but analysts remained wary as poordemand outlook for metals persisted. Lead and zinc rallied morethan 5 percent, boosted by gains in copper and after a Chineselocal government decided to shut down smelters with annual outputof 500,000 tonnes.
Copper for delivery in three months on the London Metal Exchangeclosed at $5,315 per tonne, up $75 from $5,240 per tonne onThursday. It rose as high as $5,429 per tonne.
European shares slid after rising earlier in the day while U.S.stocks lost ground on continuous fears of a slowdown in the globaleconomy, despite Wednesday's coordinated rate cut by the centralbanks across the globe.
Analysts said the move is not likely to provide a permanent remedyfor markets and with the demand outlook rather weak for metals,prices are likely to remain under pressure.
"These bounces are very very trivial when you think of what hashappened in the past few days," said Stephen Briggs, commoditystrategist at RBS, referring to sharp falls this week.
Copper prices have tumbled more than 11 percent so far this week,bringing losses to around 40 percent since early July, when ittouched a record high of $8,940 a tonne.
"Central bank action is not suddenly going to solve all of ourproblems," Briggs said. Rate cut moves by the central banks wononly muted market support, while finance ministers from the world'stop economies faced calls for united action.
Global financial turmoil prompted investors -- desperate for cash-- to sell their positions as they dumped riskier assets.
Barclays (nyse: BCS - news - people ) Capital said the total amount of money invested in commoditieshas fallen to $210 billion from $270 billion in the third quarter.It was the first drop since 2003.
Poor fundamentals mean there could be more to come.
"Although all attention is firmly focused on the credit crunch,rate cuts and the financial market bail outs, the deterioration ofthe real economy has not escaped traders of industrialcommodities," UBS (nyse: UBS - news - people ) said in a note.
The market is also awaiting further details on the Shanghai FuturesExchange's move to compulsorily close positions on 10 copperfutures contracts.
Aluminium was at $2,307 a tonne from $2,250.
FURTHER OUTPUT CUTS
Zinc, lead, tin and nickel were all supported by expectations thatprices near or below the marginal costs of production will likelyforce more output cuts from loss-making mining companies.
Lead and zinc prices were also boosted by a Chinese localgovernment decision to close smelters, in a move expected to cutChina's lead and zinc output by 20 percent in the fourth quarter,after an accidental discharge of arsenic in southwestern China, alocal newpaper reported.
China is the world's biggest producer of zinc and lead.
Lead jumped more than 5 percent or $85 to $1,660, while zinc closedat $1,498 a tonne from $1,430.
Nickel rose to $13,400, up from $13,200 a tonne. The metal earlierfell to $12,625, its lowest level since December 2005, on concernsabout demand from stainless steel producers.
Tin, seen as the metal with the strongest fundamentals, was lastquoted at $14,750/14,800 from $14,900 a tonne. Metal Prices at 1611GMT Metal Last Change Percent Move End 2007 Ytd Percent
move LME Cu 5310.00 70.00 +1.34 6670.00 -20.39 SHFE Cu* 0.00-45720.00 -100.00 56880.00 -100.00 LME Alum 2305.00 55.00 +2.442403.00 -4.08 SHFE Alu* 14165.00 -65.00 -0.46 18180.00 -22.08 COMEXCu** 238.25 1.60 +0.68 303.05 -21.38 LME Zinc 1487.00 57.00 +3.992370.00 -37.26 SHFE Zinc* 12285.00 -445.00 -3.50 18950.00 -35.17LME Nick 13200.00 0.00 +0.00 26350.00 -49.91 LME Lead 1647.00 72.00+4.57 2550.00 -35.41 LME Tin 14675.00 -225.00 -1.51 16400.00 -10.52** 1st contract month for COMEX copper * 3rd contact month for SHFEAL, CU and ZN SHFE ZN began trading on 26/3/07 (Reporting by JulieCrust; editing by Michael Roddy) Copyright 2008 Reuters, Click for Restriction