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Mining industry

LME Metals Mostly Higher Amid Equity Gains and Softer Dollar

Strategic Insights

— 1 min read

Base metals started the year on a relatively firm footing, with copper, aluminum, and zinc prices increasing amid equity gains and a weaker dollar. The dollar's decline against the euro provided support to dollar-denominated assets like metals, making them appear cheaper to other currency-holders. Recent better-than-expected Chinese and European purchasing managers' index data also contributed to the metals' gains, as they signal increased demand from the top metals consumer, China. However, traders remain cautious about base metal prospects in the medium term due to ongoing debt contagion risk in the euro zone.

Key Takeaways:

  • Base metals prices, including copper, aluminum, and zinc, increased on the London Metal Exchange (LME) amid equity gains and a softer dollar.
  • The dollar's decline against the euro provided support to dollar-denominated assets like metals, making them appear cheaper to other currency-holders.
  • Recent better-than-expected Chinese and European purchasing managers' index data signaled increased demand from the top metals consumer, China.
  • Traders and analysts remain skeptical about base metal prospects in the medium term due to ongoing debt contagion risk in the euro zone.
  • Anglo American PLC reaffirmed that it is not obliged to sell any Anglo American Sur shares to Codelco, a Chilean state copper giant.
  • Analysts noted that high levels of pessimism among financial investors can be a good contrary indicator for metals prices, sparking a sharp price rise in the event of an improvement in the market situation and sentiment.

Statistics:

  • LME three-month copper price at 1104 GMT: $7,667.50 a metric ton (up 0.9%).
  • Aluminum price: $2,026/ton (up 0.3%).
  • Zinc price: $1,848.75/ton (up 0.2%).
  • Niobium price: Not mentioned in the article (down 1.2% at $18,488/ton).
  • Lead price: $2,024.25/ton (down 0.5%).
  • Tin price: $19,350/ton (up 0.8%).

Sources:

  • Dow Jones Commodities News via Comtex, January 3, 2012.
  • Fairfax I.S. report, cited in the Dow Jones article.
  • Commerzbank statement, cited in the Dow Jones article.

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