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Base
metals were drifting lower in light trade Friday morning on
the London Metal Exchange Select platform, bar aluminium which
was again showing sturdy volumes, a UK-based trader said.
Copper, zinc and--to a lesser extent--nickel have led the
complex higher this week and as the summer tails off consumer
demand returns to the fore during the final months of 2006.
Friday's close is seeen as key to how the complex begins next
week, with the prospect of a further rally should the metals
hold their gains. "There is some consolidation going on, the
complex is drifting a little with some profit-taking in the
market," the London-based trader with an LME ring dealer said,
adding: "The dollar has gotten stronger this week and this is
changing the way traders are looking at the market, and all
metals have moved sharply higher recently, mainly on small
volumes." The one exception to this has been aluminium.
"Aluminium has seen good volumes with between 7,000
and 10,000 lots done on the platform, good volumes when
compared to the last month and a half," he said, adding: "We
have also seen good fund buying in copper, aluminium and zinc
which has been taking a lot of people out of the market and
forcing them to short." Three-months aluminium was bid at
$2,640/mt at 0920 GMT down $20 on its Thursday evening kerb
close. Copper was $90 lower than its previous close at
$7,920/mt. "We are seeing a little correction but if we get
back to the higher numbers seen earlier in the week then we
get to start next week on a good footing and we could see a
run," the trader said, adding: "Alternatively we could see a
continuation of the consolidation and drifting." Barclays
analyst Phil Roberts suggested that "a decisive close above
$8,150/mt would allow for further gains towards the May peak
of $8,800/mt, while below $7,745/mt is needed to suggest a
return to the ranging environment."
On aluminium,
Roberts suggests that while it looks overcooked, a decisive
close would give traders confidence to be more bullish. Zinc
was bid at $3,635/mt, down $40 on its previous close, while
lead was bid at $1,312/mt off $6 overnight. Nickel was bid at
$28,300/mt $150 lower than its previous close. If nickel can
hold its 21-day moving average at $28,010/mt, it may turn the
currently negative sentiment, while a breach could see a
return to $23,000/mt, Roberts suggested. Tin was bid at
$9,200/mt, unchanged on its previous close. Aluminium alloy
was bid at $2,325/mt, off $5 overnight, while its North
American sister metal was bid at $2,350/mt also off $5 on its
previous close. The dollar was bid at $1.2718 compared with
its last trades in London on Thursday at $1.2737.
This
commentary was first published in Platts Metals Alert. If you
have any feedback about this commentary or want to find out
more about Platts Metals products and services, please contact
webeditor@platts.com
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