|
|
|
|
October 11, 2010 Dear Friend, · Less LME or Comex inventory withdrawal activity occurred this past week during the October 1-7 Chinese “National Week” holiday. While WBMS demand data suggests German auto and machinery carried world metals demand in mid-2010 as Chinese gains leveled off after 2009 over-buying, the lull during China’s holiday tells us it is very important right now.· The Shanghai Futures Exchange published inventories on October 8th after its National Week holiday October 1-7th. Copper inventories rose unexpectedly 6,727 tonnes to 94,174 tonnes, aluminum fell 444 to 488,790 tonnes and zinc rose by 4,624 to 258,934 tonnes. · Total copper exchange inventories rose 3,221 tonnes apparently due to the holiday. LME and Comex copper inventory declines averaged just 332 tonnes per day on Monday through Thursday during the Chinese “National Week” holiday, and then declined a combined 2,178 tonnes on Friday October 8th to net to a 3,506 tonne decline which, combined with the Shanghai 6,727 rise, caused a 3,221 tonne consolidated rise on the week. We think the trend is declining. · This past week exchange aluminum inventories fell 21,764 tonnes, nickel 372 and tin 225 while lead rose 4,025 and zinc rose 524 tonnes.
· On October 8th we cut our price target on BHP Billiton to $76 from $89 per ADS and our rating to Neutral from Overweight and today we cut our price target for Alcoa to $16 from $18, staying at Overweight. Cost escalations weighed heavily on our reasoning in both cases, particularly as the “resource-rich” A$ strengthens and perhaps could strengthen more up to US $1.10.
Faithfully,
John C. Tumazos, CFA
|
Copyright © 2008 John Tumazos Very Independent Research,
LLC
|
