Funds versus...the fundamentals

摘要

The investment fund community is playing an increasingly influential role in the base metals markets. If anything, they appear to have stepped up a gear in January and early February, which likely represents fund managers adjusting their portfolios in the new year to increase their exposure to these hot markets. To a greater or lesser degree, all of the base metals have participated in the latest leg of the price rally, even lowly tin, which spent all of last year stuck in a downward trend. Tin's sudden revival in January, which apparently contradicts the most obvious gauges of supply and demand, smacks of an influx of fund money. We suggest that tin has benefited from a re-weighting by some fund managers, representing a diversification of their investment across the base metals complex. The relative under-performance of both tin and nickel last year, make these metals ripe for such a. move, and it is likely that these markets are seen as having the potential to climb back towards their 2004 highs (in excess of 10,000 dollars/tonne for tin and 17,000 dollars/tonne for nickel). After all, copper, aluminium, zinc and lead are all comfortably above their 2004 highs.