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Contact Us <[EMAIL PROTECTED]> Request For Trial <http://www.platts.com/Request%20More%20Information/> The London Metal Exchange base metal complex edged up slightly in early trade Thursday after drifting down at Wednesday's close. One LME ring trader contacted by Platts said that the market was still being driven by the dollar, which steadied Thursday morning to be bought for Eur0.6362 after suffering early losses after the Federal Reserve put paid Wednesday to expectations of an early rate hike. The trader said that early morning trade Thursday had been thin, noting that only relatively small volumes had been moving. "I still think the market is being driven by the dollar," he said. "Fundamentally people are still looking at power issues in China affecting aluminium and it's reaching some resistance around $3,075/mt." Three-months aluminium was seen up just $9 in early trade Thursday, bid at $3,067/mt at 0908 GMT. Aluminium prices were also being supported by speculation that $4.5 billion aluminium smelter project in Saudi Arabia had been stalled. UBS analyst John Reade said in a report that the base metal laggers and leaders had seen the complex shift into two separate gears: "The two speed base metal market continues with copper and aluminium driven by momentum and CTA buying while nickel, lead and zinc remain near the bottom of their recent ranges." "We are seeing very little consumer buying of any metals and considering the recent increases in LME aluminium stocks and slightly lower crude oil prices, this metal may be vulnerable to a correction. Copper remains pricey but is at least supported by low stocks and a tight front end of the curve, even if we see no reason why copper should have an eight in front of it at the moment." Reade also noted that LME's Martin Abbot had pointed at a 'structural change' in commodity markets, fueling higher prices, but that it would be 'foolish' for any government to stifle participation in markets. Copper picked up $100 in early trade Thursday, to be seen at $8,400/mt. The trader commented that most of the complex was working within established ranges: "Copper had a test on the downside at around $8,300/mt. Aluminium seems to be slipping on a daily morning basis. We have seen some CTAs buying through to $3,100/mt which could be a sign of long liquidation." Nickel made a decent gain, bid up $560 from its previous close to be seen at $21,650/mt at 0908 GMT. Tin also followed suit, picking up $145 to be seen at $22,850/mt. Both alloy contracts saw activity, with North American alloy down $30 from its last trade bid at $2,720/mt and standard alloy bid down $40 from its last trade at $2,685/mt. Lead and zinc, which have been hovering at the bottom of the complex in recent weeks, also made modest gains, up $18 at $1,800/mt and up $15 at $1,890/mt respectively. The trader concluded: "Lead and zinc seem to be the dogs of the complex, we've just not seen any interest there at all really. However, we have seem some good, if scaled down buying, people are waiting for prices to come down a bit and then buy into the dip." 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 [EMAIL PROTECTED] Updated: June 26, 2008
