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Real estate industry

Base Metals Rally on US Dollar Weakness and Higher Home Sales

Strategic Insights

— 1 min read

Base metals on the London Metal Exchange traded higher due to the US dollar's weakness and higher-than-expected US home sales figures. The US economy, and that of other countries, is showing signs of stabilizing, according to US Federal Reserve Chairman Ben Bernanke. This sentiment boost has driven up base metals, with LME copper rising 3.5% from its Monday close. The market saw a mix of surplus and deficit data releases, with the World Bureau of Metal Statistics showing all metals in surplus for the first six months of the year, and the International Copper Study Group reporting a 95,000-metric-ton deficit in May due to high Chinese imports.

Key Takeaways:

  • The US dollar's weakness fueled the rally in base metals, with LME copper rising 3.5% from its Monday close.
  • Higher-than-expected US home sales figures boosted sentiment, with a 3.5% increase in LME copper prices.
  • The US and global economies are showing signs of stabilization, according to US Federal Reserve Chairman Ben Bernanke.
  • The World Bureau of Metal Statistics reported that all metals were in surplus for the first six months of the year.
  • The International Copper Study Group reported a 95,000-metric-ton deficit in May, due to high Chinese imports of refined metals.
  • Chinese demand for metals surged by nearly 45% in the first five months of 2009, offsetting a decrease in demand outside of China.
  • Norsk Hydro's CEO stated that demand is flattening out after a long downturn, but the company is not yet cutting output.
  • The International Lead and Zinc Study Group reported that lead and zinc were in surplus.

Statistics:

  • LME copper prices rose 3.5% from the close on Monday.
  • Existing-home sales in the US increased by 7.6%, the highest level in nearly two years.
  • Chinese demand for metals increased by 44% in the first five months of 2009.
  • World demand for metals decreased by 1.1% in the first five months of 2009.
  • The International Copper Study Group reported a 95,000-metric-ton deficit in May.
  • The World Bureau of Metal Statistics reported that all metals were in surplus for the first six months of the year.

Sources:

  • Dow Jones Commodities News (21 August 2009)
  • LME (London Metal Exchange)
  • US Federal Reserve
  • World Bureau of Metal Statistics
  • International Lead and Zinc Study Group
  • International Copper Study Group
  • Norsk Hydro

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