Flying start to 2003 ...

摘要

LME metal prices have achieved strong gains since the start of 2003. To the time of writing on February 3, nickel cash quotes had risen 17 percent, copper 12 percent and lead 10 percent. Even underformers zinc and aluminium, both burdened by over-supply, posted increases of 6-7 percent over the period. At first glance it would appear a surprising trend given the continuing uncertainty surrounding the global economic recovery, falling equity markets, the near-inevitability of war in Iraq, and rising oil and gold prices. So why the rally in base metal prices, when one would ordinarily expect to be in the midst of a downturn given the bearish factors predominating in the current climate? The answer is that after enduring three consecutive years in decline - and having now made a miserable start to a fourth year - the key Dow Jones and FTSE indices, are losing favour with the funds, which have moved to increase their exposure to commodities instead of the poor performing equities. Because these players are used to dealing in very large and highly liquid financial markets, they can have a disproportionate effect on the smaller and inherently tighter trade on the LME. Copper and nickel were the principal investment vehicles among the metals - likely due to their strong fundamentals - however, the buying also filtered through to the rest of the complex, irrespective of whether the market fundamentals for each metal were good, bad or indifferent.