EDWARD MEIR: + 1-203-656-1143 Senior Commodity Metals Analyst Email: emeir@mfglobal.

com

TUESDAY, FEBRUARY 15, 2011

LME DAILY METALS REPORT
As of Feb. 14 CU AL PB ZN NI SN NAA HIGH 10160 2517 2640 2539 28895 32450 2510 LOW 10097 2501 2627 2499 28700 32275 2515 CLOSE 10160 2514 2640 2521 28895 32450 2510 75,520 (-60) CSH/3 +19.5 -22.75 +7 -21 -27 -25 -15.25 3’S/15 +217 -65 +59 -27 +1118 +420 -42.5
LME STOCKS (CH) 402,425 (+650) 4600225 (+5500) 297,500 (+1925) 709,025 (-50) 130,248 (-174) 17,570 (-25) 137,180 (-140)

SUP 9781 2374 2420 2320 23600 30000 NA

RESIS 10160 2541 2712 2540 30000 35000 NA

RSI 68 55 62 62 73 88 60

VOL (000) 128 188 40 70 44 10.1

O/I (000) 306 699 113 239 102 22 8.4

10 MAV 9996 2536 2563 2482 28230 31218` 2507

40 MAV 9585 2467 2527 2398 25972 28149 2416

100 MAV 8893 2398 2442 2353 24456 26615 2341

Shanghai Nearby Last (YUAN) Shanghai Stocks as of Feb 1

17,050 (-75) AL: 431,356 MT (+1472) PB 2712 / 2325 2690 / 1535

2.7 19,420 (-50)

CU: 144,197 MT(+9899) AL 2575 / 2360 2500 / 1828

ZN: 326,620 (+410) NI 29044 / 23822 27250 / 16975

LME/SHAN CU ARB: NA SN 32799 / 25725 27500 / 14850

2011 HIGH/LOW 2010 HIGH/LOW

CU 10190 / 9235 9728 / 6035

ZN 2547 / 2220 2736 / 1577

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 respective periods, with a positive number reflecting a backwardation and a negative numbers reflecting a contango. Stocks (in MT) show inventories on hand for the current 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-day moving 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 for any 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 8:30 a.m. on February 15th, US east coast time...

Metals pushed higher yesterday, with the main action concentrated in copper, which rallied to another record high after a surprise jump in January Chinese imports. There was a good analysis written by Andy Home of Reuters who attempted to explore what might be behind the recent rise in imports given the sluggish physical market, a consistent flow of metal into LME warehouses in South Korea, and an LME-Shanghai arbitrage that has been negative for almost six months now. Home argues that it is possible that Chinese copper buyers have collectively decided to shun the spot market this year by buying monthly tonnages directly from producers under annual contracts. "If a manufacturer has even moderate confidence in its order-book projections over the coming twelve months, it makes sense to cover anticipated metal requirements with producer tonnage", Home writes. "In such a scenario China's copper imports could remain strong and the spot market weak for an extended period of time". Home says that another explanation for the high imports may be due to government purchases of copper, as the metal is viewed as a strategic commodity by the authorities. A third possibility - and more bearish in its implication - is that China is importing metal, but that these units are "passing through the country's customs department, at which point it is classified as imported, but travelling no further than bonded warehouse in Shanghai. No VAT has been paid on such metal and it will only be paid at the time that the metal is sold on to a domestic buyer in China". Although there is no confirmation that such "limbo" stocks exist, Home writes that they could be as high as 500,000 tons. If such metal is indeed being collected in warehouses, the metal could be conceivably shipped out of the country when

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 this date and are subject to change without notice. The principals of MF Global and others associated or affiliated with it may recommend or have positions which may not be consistent with the recommendations made. Each of these persons exercises independent judgment in trading, and readers are urged to exercise their own judgment in trading. © by MF Global Inc. (2010) 440 S Lasalle Street Chicago, Illinois, 60605.
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2/15/2011 LME METALS DAILY REPORT

conditions warrant. One way of finding out, is to monitor refined copper export flows out of China. In this regard, Home notes that in December of 2010, refined copper exports were roughly 10,500 tons, the highest they have been in more than a year. Right now, metals are mostly mixed, with copper down slightly, while there are more modest increases in the rest of the complex. Markets are digesting the recent inflation numbers out of China, which exceeded the government’s 2011 target for a fourth straight month. Consumer prices were up 4.9% in January from a year earlier, while producer-price inflation accelerated to 6.6% from 5.9% in December. Although the CPI number came in somewhat lower than expected, we doubt this will change the rate-rising stance the authorities will seek to maintain, as there are few signs that the inflation picture will actually moderate going forward. (For what its worth, the Chinese inflation numbers, if anything, tend to understate the actual increases, and some Chinese economists suggest that the numbers are likely double what the official releases are showing. We came across an analysis of Chinese inflation pricing methodology, where, for example, apartment rents are included in the price index, but costs for soaring owner-occupied housing are excluded. In addition, garments qualify for inclusion only once they have been on sale continuously for at least six months, which frequently means that they are no longer in style, while many other items included in the index are based on an outdated list of consumer products). In US macro news, we get January retail sales (expected up .5%), as well as the Empire Manufacturing index (expected at 16) later today. Out of Europe, we have reports today that gross domestic product in the euro region rose 0.3% from the previous three months, coming in slightly less than the .4% expected. However, German investor confidence increased for a fourth month in February, with the ZEW Center for European Economic Research in Mannheim saying its index of investor and analyst expectations rose to 15.7 from 15.4 in January. In other markets right now, the dollar is slightly weaker, now trading at $1.3510 against the Euro, but not doing much for the last three days. US stocks are expected to open slightly higher. Oil prices are up again, as investors remain nervous about developments in the Middle-East. Yesterday, there were protests in Egypt, Yemen, Iran, Algeria, and Bahrain. The most intense of these occurred in Iran, where thousands took to the streets in a direct challenge to the authorities. In other news, the Singapore Exchange and the London Metal Exchange said they had successfully launched LME-SGX copper, aluminum, and zinc futures in order "to provide retail investors in Asia and beyond easy access to global metals markets." We will monitor the progress there. ---------------------------------------------COPPER SUPPORT: $9781 / RESISTANCE: $10160 We are now at $10,120, down $35. We still are waiting for two clean closes above $10,160 to signal another technical breakout in the charts. LME stocks were up by a sizable 650 tons overnight, but Chinese import data out yesterday will likely generate enough momentum to keep things going on the upside for a little while longer. * Output from Chile's Escondida copper mine, fell minimally in 2010, by 1.4% to 1.09 million tons, however, the rate of decline was less than the previous two years during which significant declines were experienced due to lower ore grades, owner BHP Billiton said. -------------------ALUMINUM SUPPORT: $2540 / RESISTANCE: $2660 We are now at $2520 on ali, up $6, and not doing very much today, with a $30/MT trading range in place. * RUSAL expects steady output growth in 2011 largely due to strong demand from China and demand increases in North America, the company said. Production is forecast to grow by 2% this year to 4.08 million tons, nearly even with last year’s

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 this date and are subject to change without notice. The principals of MF Global and others associated or affiliated with it may recommend or have positions which may not be consistent with the recommendations made. Each of these persons exercises independent judgment in trading, and readers are urged to exercise their own judgment in trading. © by MF Global Inc. (2010) 440 S Lasalle Street, Chicago, Illinois, 60605.

2/15/2011 LME METALS DAILY REPORT

3% increase. Meanwhile, global demand for the metal is expected to grow by 8% to reach 43.8 million tons. The company also expects to launch an aluminum ETF over the next several weeks. ---------------------------ZINC SUPPORT: $2320 / RESISTANCE: $2540 We are at $2533 on zinc, up $13. We did near resistance at $2540 earlier in the day, but have since backed off. Two closes above this level could trigger another run higher . --------------------------LEAD SUPPORT: $2420 / RESISTANCE: $2712 We are at $2660 on lead, up $20/MT, and with another close above $2600 resistance today (likely), a retest of the old high of $2712 could be next. ----------------------------------NICKEL SUPPORT: $23,600 / RESISTANCE: $30,000 Nickel is at $29,044, up $149, and now at a fresh 2011 high. We seem to be on track for a test of $30,000 resistance. -------------------TIN SUPPORT: $30,000 / RESISTANCE: $35,000 Tin is at $32,600, up $150, as the complex marches towards $35,000.

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 this date and are subject to change without notice. The principals of MF Global and others associated or affiliated with it may recommend or have positions which may not be consistent with the recommendations made. Each of these persons exercises independent judgment in trading, and readers are urged to exercise their own judgment in trading. © by MF Global Inc. (2010) 440 S Lasalle Street, Chicago, Illinois, 60605.

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