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mfglobaldaily_2-17-11

mfglobaldaily_2-17-11

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Published by: marketpanic on Feb 17, 2011
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The information contained in this report has been taken from trade and statistical services and other sources which we believe are reliable. MF GlobalInc. does not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice. The principals of MF Global and others associated or affiliated with it may recommendor have positions which may not be consistent with the recommendations made. Each of these persons exercises independent judgment in trading, andreaders are urged to exercise their own judgment in trading. © by MF Global Inc. (2010) 440 S Lasalle Street Chicago, Illinois, 60605.
LME DAILY METALS REPORT
THURSDAY FEBRUARY 17 2011
1
mfglobal.com
Explanations for our table: High/low/close are official LME prices for the day prior; cash/3’s and the 3’s/15 spreads is the spread between the respectiveperiods, with a positive number reflecting a backwardation and a negative numbers reflecting a contango. Stocks (in MT) show inventories on hand for thecurrent day, along with changes from the day prior. Volume and open interest data are for the day prior, while the MAV refers to the 10, 40, and 100-daymoving averages. Shanghai prices are as of close of trading from the day priori; Shanghai stocks are in MT for the week indicated; please contact this writer forany further questions. *Arb differential number is derived as follows: LME 3-m copper in Yuan, including 17% VAT, minus SHFE third month;(+ would mean LME is over).
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------This market comment was written at 8:05 a.m. on February 17th, US east coast time...
Copper ended down for a second straight session yesterday, as prices worked lower on lingering concern about Chineseinflation data released earlier in the week, coupled with similar worries surfacing here in the US. In this regard, we hadreports out yesterday that underlying wholesale prices in the US climbed in January to their highest level in more than twoyears, as the index of producer prices rose 0.8%, slightly ahead of estimates. Core prices were up a more benign .5%, butthere is little doubt that the commodity price spiral we have been witnessing over the past few months is finally starting toseep into the US (particularly if one disregards the controversial "core" rate reading, which excludes food and energy).Whether manufacturers are now able to pass these rising wholesale costs on to their customers is a different matter, andsuccess will vary from industry to industry. Our take is that manufacturers will, by and large, struggle to pass the bulk ofthese costs on because of intense competition, guarded spending by US consumers, and still-high unemployment.Right now, metals are off again, although off their worst levels, with copper and tin down the most. The dollar is steady,holding at $1.3550 against the Euro, and not doing much over the last few days, while oil prices are down by about $.10 afterspiking yet again yesterday on renewed tensions in the Middle-East. This came in the wake of a statement put out by theIsraeli foreign minister claiming that two Iranian warships were planning to sail through the Suez canal en route to Syria onWednesday, and went on to describe the move as a "provocation".
EDWARD MEIR: + 1-203-656-1143
Senior Commodity Metals Analyst 
Email: emeir@mfglobal.com
As ofFeb. 16HIGH LOW CLOSE CSH/3 3’S/15
LME STOCKS(CH)
SUP RESIS RSIVOL(000)O/I(000)10MAV
9993
 
40MAV
9630
 
100MAV
8934
 
CU
9930 9840 9842+6
 
+156
407,200 (+1400)
9650 10190 54
 
135 315
AL
2524 2504 2504-28.5
 
-67.5
4598200 (+275)
2470 2570 53
 
195 7502528
 
2475
 
2402
 
PB
2645 2591 2592+3.75
 
+54
297,200 (-50)
2420 2712 56
 
44 1152575
 
2538
 
2448
 
ZN
2520 2485 2486-26.25
 
-39
708,875 (-100)
2320 2540 57
 
92 2662487
 
2411
 
2358
 
NI
28675 28550 28575-33
 
+1025
129,924 (-174)
23600 30000 68
 
34 109283702616424573
SN
32550 32500 32500-40
 
+400
17,610 (-60)
30000 35000 88
 
11 21.3316422847126793
NAA
2480 2490 2490-15
 
-41.5
137,180 (+100)
NA NA 56
 
2.1 82509
 
2426
 
2344
 
Shanghai Nearby Last (YUAN)74,680 (-980) 17,150 (-75)
 
19,760 (-195)
 
Shanghai Stocks as of Feb 1 CU: 144,197 MT(+9899) AL: 431,356 MT (+1472) ZN: 326,620 (+410)LME/SHAN CUARB: 1287
CU AL PB ZN NI SN
2011 HIGH/LOW10190 / 9235 2575 / 2360 2712 / 2325 2547 / 2220 29095 / 23822 32799 / 257252010 HIGH/LOW9728 / 6035 2500 / 1828 2690 / 1535 2736 / 1577 27250 / 16975 27500 / 14850
 
 
2/17/2011
 
LME METALS DAILY REPORT
 
US industrial production numbers were also released on Wednesday, with December's output falling by .1%, and coming inworse than expected. However, December's readings were revised higher to a 1.2% gain from an earlier estimate of .8%.The January decrease was not entirely unexpected given the poor weather that gripped much of the nation last month.Capacity utilization also fell slightly, dipping to 76.1% from a revised 76.2% the previous month. Despite the overall fall,manufacturing production was up 0.3% in January, with the year-over-year increase now at 5.5%.Housing data showed that construction of homes and apartments rose almost 15% from a month earlier to a seasonallyadjusted annual rate of 596,000, slightly higher than estimated. However, new building permits, a gauge of futureconstruction fell 10.4%, wiping out most of the 15.3% gain seen in the previous month.Finally, minutes released by the Federal Reserve showed that officials were slightly more optimistic about the US economicoutlook than they were a month ago, but not upbeat enough to call for an early end to their quantitative easing program.Although the economy looks a bit stronger to the Fed, officials expect the unemployment rate to remain high. The minutesreveal that the central bank expects US GDP to increase between 3.4%-3.9% this year, about .3% higher then the Novemberforecast.Later today, we get January CPI (expected up .3%), weekly initial claims (expected at 410,000), the January index of leadingindicators (expected at .2%), and the February Philadelphia Federal Reserve business index (expected at 21.9).In other news, Goldman Sachs will close its "global macro proprietary trading" desk soon, the WSJ reported on Tuesday.“Keeping the prop business going will have little benefit and closing it will be seen as a positive move to comply with Dodd-Frank,” an equity analyst remarked.At the end of our report, we run inventory charts for all the base metals, both on the LME and in Shanghai.----------------------------------------------
 COPPER SUPPORT: $9650 / RESISTANCE: $10190
We are now at $9,783, down $59, but as our chart below shows, the sell-off so far has been modest enough to keep theupward trend-line largely intact—although just barely. A sell-off to $9650 could lead to a break in the line, and likely triggermuch heavier selling.
The information contained in this report has been taken from trade and statistical services and other sources which we believe are reliable. MF Global Inc.does not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at thisdate and are subject to change without notice. The principals of MF Global and others associated or affiliated with it may recommend or have positions whichmay not be consistent with the recommendations made. Each of these persons exercises independent judgment in trading, and readers are urged to exercisetheir own judgment in trading. © by MF Global Inc. (2010) 440 S Lasalle Street, Chicago, Illinois, 60605.
 
 
 
2/17/2011
 
LME METALS DAILY REPORT
 
* The global copper market was in a small surplus of 20,000 tons in 2010, narrowing from a surplus of 410,000 tons during2009, the
World Bureau of Metal Statistics
said on Wednesday. During 2010, refined production rose to 19.25 million tons,up 3.2 per cent compared to the same period in 2009. Chinese output rose by 464,000 tons, while Chilean metal productionfell by 55,000 tons to 3.22 million tons. Consumption, on the other hand, was 19.23 million tons in 2010, up from 18.24 milliontons in the previous year, WBMS said in a statement. World copper mine output in January to December was 16.04 milliontons, up 1.5 percent from year-ago levels.* Hedge fund
Red Kite
thinks the record highs in copper are unsustainable and prices need to fall 20% or so to attract theChinese back into the market, a senior official at the fund's China joint venture said on Wednesday.*
BHP Billiton
announced underlying profits of $17.3 billion for the six months until Dec. 31, with a 59.7% year-on-year rise inprofits on account of higher commodity prices and improved demand. The company expects a modest downturn in the growthrate of global commodity demand this year despite a strong near-term outlook for its products. BHP plans to invest over $80billion on organic growth until the end of 2015, including spending on coal and iron ore developments, the company said.--------------------
ALUMINUM SUPPORT: $2470 / RESISTANCE: $2570
We are now at $2502 on ali, down $2. Prices seem to be trading within a $100 range of between $2470-$2570.*
Norsk Hydro
expects
Chinese aluminum consumption
to grow by 10% this year, due to the country’s widespread useof the metal in transport and packaging. "We see demand within packaging quite stable, increasing," the company’s chiefexecutive told Reuters.* The
World Bureau of Metal Statistics
said on Wednesday that primary aluminum market was in a surplus of 558,000tons, compared to a surplus of 1.84 million tons in 2009.----------------------------
ZINC SUPPORT: $2320 / RESISTANCE: $2540
We are at $2485 on zinc, down $1. We did near resistance at $2540 again today, but have backed off once again. Chartscontinue to show a sideways drift.* The
World Bureau of Metal Statistics
said that the zinc market was in surplus by 341,000 tons in 2010, rising from asurplus of 248,000 the year before.----------------------------
LEAD SUPPORT: $2520 / RESISTANCE: $2712
 We are at $2577, down $15/MT; another close below $2600 today likely suggests that the earlier breakout may not have hadlegs, and prices could instead work lower. We see trend-line support around $2520, as our chart on the next page shows.
The information contained in this report has been taken from trade and statistical services and other sources which we believe are reliable. MF Global Inc.does not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at thisdate and are subject to change without notice. The principals of MF Global and others associated or affiliated with it may recommend or have positions whichmay not be consistent with the recommendations made. Each of these persons exercises independent judgment in trading, and readers are urged to exercisetheir own judgment in trading. © by MF Global Inc. (2010) 440 S Lasalle Street, Chicago, Illinois, 60605.
 

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