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Base Metals Seen Slumping Further

Stocks in this article: FCX SCCO TCK

NEW YORK ( TheStreet) -- Base metals Thursday are likely to extend losses for the third consecutive day with markets cautious on the consolidating dollar index. The complex also will look for other influential data such as increasing initial jobless claims in the U.S. and a widening current account deficit.

China's banking regulator is likely to ask the nation's biggest banks to boost capital adequacy ratio to almost 15% by 2012, which will further slow down loan growth affecting economic expansion, a Goldman Sachs report says.

Economic data releases for Thursday include the Producer Price Index for August, which is likely to come in at 0.3%, against July's 0.2%. For the second quarter, the current account balance is seen at a deficit of $125 billion, compared to the earlier month's $109 billion deficit. Initial jobless claims for the week ended Sept. 11 are pegged at 458,000, above the earlier week's 451,000. Meanwhile, continuing claims for the week ended Sept. 4 are seen at 4.47 million vs. 4.48 million claims earlier.


Copper for three-month delivery ticked 0.3% lower to $7,593 per tonne on the London Metal Exchange Thursday, as worries about China's tightening measures further sharpened. Inventories slumped 1,025 tonnes to 389,500 tonnes. The metal finds support and resistance at $7,569 and $7,663, respectively.

Japan's top copper smelter Pan Pacific announced plans to produce 13% below capacity for the October-March period, pressured by plunging processing fees. As a result, the period's output is estimated at 270,000 tonnes.

Southern Copper (SCCO), which closed at $32.83 on Wednesday, finds support at $32.63 and faces resistance at $33.00. Freeport-McMoRan Copper & Gold (FCX) closed at $81.40 with support and resistance at $80.46 and $81.90, respectively. Teck Resources (TCK) closed at $38.71 with support at $38.21 and resistance at $39.35.


Aluminum for three-month delivery slipped 0.4% to $2,146 per tonne. LME stockpiles accumulated 625 tonnes to close at 4.40 million tonnes. The metal finds support at $2,137 and faces resistance at $2,164.

Alumina (AWC) is likely to incur $11 million in costs during the third quarter because of the start-up of the Alumar refinery, a joint venture of Alumina and Alcoa (AA), in Brazil. The costs after tax would have a minimal impact on the company's fourth-quarter profit. The refinery would produce 9,000 metric tonnes of alumina a day by the end of the year.

Alcoa closed trading at $11.43 Wednesday, finding support and resistance at $11.35 and $11.50, respectively. Century Aluminum (CENX) closed at $11.29 with support at $11.16 and resistance at $11.38. Kaiser Aluminum (KALU) closed at $41.60 finding support at $41.24 and resistance at $41.94.

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