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February 1, 2009 Dear Friend, All lead indicators suggest the world manufacturing markets worsen. Lumber made its eleventh 27-year price low since October, scrap steel quotes began to ease and nonferrous metals inventories exploded this past week. Aluminum inventories rose 461,356 tonnes and copper 155,691 tonnes in January on exchanges, which suggests aluminum demand is 12.9% short of supply, copper 10.4%, zinc 9.2%, nickel 3.4% and lead demand 1.1% less than supply. Manufacturing markets are in severe oversupply as demand appears to have fallen 5%-10% in early 2009. Moreover, it is possible that late 2008 apparent demand declines were not as much seasonal nor impacated from de-speculation, but rather end markets are plummeting. We do not expect any "seasonal" Spring rally nor particular Chinese rally this coming week after the Lunar New Year. While the Steelers Super Bowl victory brings some joy, we see no cause for happiness in the demand data in metals or other manufacturing markets. Our weekly Spot Market Review is attached spelling out these dynamics in more detail. Faithfully, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
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